Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Hi, I'm new to the landlord world. Hopefully my investment property will be available for rent within a month.
I'm curious... what would be the best way to collect monthly rent? Paper check/money order mailed in, or some type of draft either with a credit card or checking acct.
How do those drafting services work and how much do they cost?
I will give you this one advice:
NEVER be the initiator of the payment, NEVER!!!!!!!!!!
Always make the tenant be the one to set up and act on the payment of the rent. If you accept checks, credit cards, debeit cards, ACH, or any other form of payment, physical or electronic, make it the responsibility of the Tenant to initiate, process, be accountable for, and responsible for, everything with that transaction. Until it hits and clears your financial institution, the tenant needs to be saddled with the responsibility.
Imagine you allow the tenant to set up an automatic deduction from their bank to yours through a service YOU set up for them to use. If anything goes wrong, be it a glich in the system, a banking error, or anything, the tanant can legally point the finger at you and claim (and the courts will acceopt) that it was you and your alone responsible since you and you alone controled the transaction so the tenmat has met their obligation to pay,a nd its not their fault you havn;'t been paid. Now, reverse it and make it the tenants responsibility. the tenat sets up the suto bill pay to you throuigh their bank, until such time as money is in your hands free and clear, the tenant has not met their responsibility. I have actually seen a judge tell a tenant that even though they mailed the check via the USPS with proof of delivery and a guaranteed deliver before due, since it has not arrived, they had X days to replace the money or be deemd in violation of the lease. And I have seen a judge tell a landlord that since he set it up so his bank debits someone elses account for the rent, the fact that his bank messed up and failed to withdraw the money, the tenant has NO responsibility to pay because the landlord is failing to act, the same as getting a check int he mail, never opening the envelope, and claiming the person is past due.
So, make sure its always the tenant who is responsible.
Always make the tenant be the one to set up and act on the payment of the rent. If you accept checks, credit cards, debeit cards, ACH, or any other form of payment, physical or electronic, make it the responsibility of the Tenant to initiate, process, be accountable for, and responsible for, everything with that transaction. Until it hits and clears your financial institution, the tenant needs to be saddled with the responsibility.
So, make sure its always the tenant who is responsible.
My tenant pays via cash deposit into a local bank account that I maintain just for that reason. The monthly cost is $5.00 if the account balance falls under $500 for the month. This way the payment is either there, or it is not, on the day it is due and there can be no arguments.
My tenant pays via cash deposit into a local bank account that I maintain just for that reason. The monthly cost is $5.00 if the account balance falls under $500 for the month. This way the payment is either there, or it is not, on the day it is due and there can be no arguments.
Ditto.
Except I don't pay a service charge.
Tenants write their last name/unit # or address on the deposit slip. Teller gives them a receipt - easy peasy.
There's a lag time on being able to pull up the deposit slips online so I solved that years ago by having each unit rent for a slightly different amount. I know immediately when the $$ is deposited.
My tenants deposit into any one of my bank accounts. I have BOA incase they're traveling and local banks or credit unions. They can deposit in person or through their billpayer. Haven't collected an actual check other than first and deposit for many years.
One time a good tenant said he left the check in the drop box in a supermarket branch. Branch said "no way". I talked to him again and he said he did drop it and I asked him to be honest with me as we could work out a deal if there was a problem. He insisted he dropped it off. I called the bank and made them check the box and it had slipped inbetween the collection box and the space it fit in. The bank was very apologetic.
My tenant pays via cash deposit into a local bank account that I maintain just for that reason. The monthly cost is $5.00 if the account balance falls under $500 for the month. This way the payment is either there, or it is not, on the day it is due and there can be no arguments.
I use a similar system, but give a discount for early pay and a penalty for late pay.
Say a $500 apartment. If they deposit BEFORE the 1st it is $475, any payment from 1st to 5th is $500 and any payment after 5th is $550. On the 6th a notice goes out for late fee. By the 10th anyone who has not paid gets 3 day notice. The date stamp on the deposit eliminates any debates over when payment was received. If they deposit $500 on the 5th a notice goes out for the late fee. If their check bounces, their payment is recorded the day it clears with fees.
Agree that the tenent should make any auto payment arrangements, not the landlord. I do not have to be in town for the first of the month, just need computer access from anywhere. No more "lost in the mail" or people knocking on my door on the 5th. Everyone knows the banks hours and location (two blocks). Amazingly few people consistently pay early and a surpising number pay between the 5th and 10th each month (a 10% rent bump for me).
For those of you that have tenants deposit the rents into your bank acct, are you concerned about them having access to your account number?
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
How do you collect your rent?
