Ever since I became a landlord I’ve always felt that collecting rent via checks was a painful process. This is 2017 after all. For a long time I simply cashed checks at the bank which eventually morphed into taking pictures of checks for deposit after I left my job where the bank was in the office. Whenever a prospective tenant mentioned they’d like to automate rent payments from their bank account I got excited. There was one problem though: doing this manually with a bank is time consuming and it involved sharing my bank account information. Despite a tenant’s best intentions they always ended up dropping the ball and not following through.
In 2016 I learned of a new service called Cozy.co from popular financial blogger and landlord Paula at Afford Anything. She mentioned Cozy briefly in one of her posts on collecting rent. I did some research on my own and decided to give it a try. Simply put, Cozy acts as the intermediary between tenants and the landlord. Their basic service is completely free and I’ve found it incredibly simple to use. My tenants have spoken highly of it from their experience as well. Besides managing payment they also offer background check services which I haven’t utilized (I handle background checks on my tenants myself using a public records search my state offers).
Before we get to how the process works I’d like to share some additional information that Cozy.co sent me when I reached out. Note that I am not receiving compensation for this review of Cozy and the links in this post are not affiliate links. I’m simply trying to spread the word about a fantastic product that has simplified the way I collect rent.
Cozy uses bank-level encryption and connections to transmit data. According to Cozy (as of June, 2016):
Many tenants come feeling nervous about providing bank information or a credit card, but in many ways, we’re more secure than the online shopping sites they use. We are trusted by over 60K property managers nationwide, processing $300M in rent every year.
You can read more about their security practices at https://cozy.co/security-and-privacy. According to Cozy they are also one of the few screening tools that does not require the applicant to give their SSN to the landlord. Similar to the way you collect rent, the landlord has no access to the bank account nor the SSN, but is able to view the full credit and background check. The company is seeded by Google, and partners with several real estate associations.
So How Does Cozy.co Work?
There isn’t anything complicated about using Cozy. You simply setup leases by inputing the property address, monthly rent, whether you’ve collected a security deposit, the tenant’s email and a few other small details. Once the lease is created, Cozy will email the tenant inviting them to signup to pay through Cozy. For new tenants you’re able to login into your account and see whether the tenant has setup their account to pay. This can take a few days since tenants need to verify their bank account information.
Below is a screenshot of the navigation once logged into your account – it is extremely simple and straight forward.
Once you have active leases and properties added, you are presented with a dashboard when you login.
You can also view the current leases and whether payment has been initiated by the tenants.
I very rarely login to my Cozy.co account since I get emails updating me when payments have been initiated and the anticipated deposit date. I also only own two properties so it’s easy for me to track. Below is a copy of the email I received leading up to February rent being due.
Downsides of Cozy.co
I personally don’t view this as a downside, but it is worth mentioning so it isn’t a surprise if you decide to use Cozy. Since money is deposited from one bank to another it is done using ACH, which is an extremely slow process, sometimes taking up to 5 business days for funds to deposit. Cozy offers a premium service to speed this process up called Express Payouts:
Receive your renters’ ACH payments in just 3 business days with Express Payouts. (Regular ACH payments typically take 5 business days to deposit.) For every enabled property, Cozy will charge you $2.99 per month (only if we collect an ACH payment). There are no limits on amounts or the number of transactions per property, and we won’t charge you if we don’t collect an ACH payment.
I do not pay for the premium service for three reasons:
- My mortgage payments aren’t taken out until the 5th day of each month which means funds most likely have reached my account by then.
- I ask my tenants politely (and explain the reasoning) to start the transfer process a few days before the end of the month.
- I can see whether the tenants have initiated the transfer so even if I don’t have the money yet, I know it is on the way and they have “paid” rent.
In my opinion the benefits of automated rent payments far outweigh this minor inconvenience of our ancient banking system. I believe this will eventually be solved with technology.
So there you have it, a full review of Cozy.co to automate rent payments from your tenants. If you’re a landlord and are still cashing checks I encourage you to check out Cozy.co. I was apprehensive at first to try it and I had low expectations for a free product but was blown away. I have been using it successfully for many months now. Plus there is an added benefit that many tenants (especially younger generations) also want to automate their rent payments as well. Please feel free to ask any questions in the comments section as I’m happy to answer them.