BiggerPockets

Could you set them up on online auto-payment of rent?

I know that's not what you're asking,... I'm not sure of the best gentle reminder letter. I'm sure someone else will post one.

I text them on the last day of the month or the first, depending on when I think about it. I just say "<name>, this is Jon. Just a reminder that rent needs to be deposited by 9:00 PM on <day of week>, <month> 1 for the discount. Total amount due is <amount>" I give a small discount if rent is paid by the first. The official amount is due by the fourth. So, they would get a different text on the 2nd, then again on the 4th if its not paid. On the 5th, they get a note on the door. That one says "pay or quit." Often rent is in before I think about texting, and they usually (not always) text me when they make the deposit. If I had a lot of tenants, I would use one of the automated texting services.

Yes, I do realize there's some risk associated with them making deposits, but it works well for everyone involved. They only earn this privilege after proving they will take care of the place and pay on time for a few months after moving in.

Since we converted our tenants to bank deposit, we send a pre-filled deposit slip with a pre-typed note reminding them that the pre-filled deposit slip is a courtesy. Works great. I usually mail it out around the 20th.

I text "status of the rent?"

If they don't respond I know I may have a problem and call, or have my bookkeeper call. Quit notice on the 6th.

@Aaron Mazzrillo, all good in theory, but almost everyone who wants money from me periodically sends me a notice - mortgages, utilities, dentist, etc. I don't see reminding tenants as any different. Between the small discount and the reminders, I get to the end of almost every 1st with all the rents in the bank. To me, that's worth sending a few texts.

And, yes, IMHO, if you're going to self manage, stalking the rents and talking to tenants comes with the job. If you want to avoid that, hire a PM. But when I compare the work the PM does for me vs. the cost, I make something like $50 or more an hour to deal with the tenants.

I sent text and called, got responses from all within an 1 hour. 2 will be deposited by Noon and the other later today. I'm a pretty judge of character and I do thorough background/credit check and all these have been good tenants, but all are travel extensively. Haven't had to do a late fee, but once and that was for 1 day.

@Jon Holdman What are the risks of having them make deposits?
Honestly trying to think of some and not coming up with any.
As you said it is convient for everyone, especially you. Seems far more secure than taking cash, checks or even certified funds.
It gives a far better record than any of the above if they claim they paid and didn't and the same in reverse if you said they didn't and they did.

I am trying to get all new tenants on a depsit system and then convert existing ones so I honestly want to know what down sides I am missing.

Thank you @Jon Holdman for the insight.
I don't have any solutions for the bad deposit situation.
For the others you could terminate the account prior to giving them notice.

The system I would be setting up would have my main account with nested subaccounts for each unit, so this should not be difficult.
Though I might not have thought to do it before!

If a quick text works for you then all the best. It really depends on what works for you and your tenants. For me a quick call on the 3rd usually takes care of it. If not a letter goes out to indicate late rent and late fee usually in their mailbox by the 5th. By the 10th a notice to quit gets started. Its not so black and white. I tell my tenants to please communicate any issue right away. It required a little education up front but worth any sleepless night. Tenant if late they will call me and we can easily remedy the situation. I reinforce to them the importance of communication and they understand. Only takes a few of these moments and all is good to go. If not then you already know that this tenant is not one you will want long term and definitely need to be on top of.

I implemented these options last fall. Not enough experience to write an opinion. So far out of 12 units, 1 performed the direct deposit using deposit slip, 1 sent through Bank Bill pay.

Pay your rent in 3 easy options:

1) Mail a Check - Current process today. Mails to a PO Box.

2) Bank Direct Deposit - Instant payment of rent performed at the bank or electronically through your online bank account. I provide the Deposit Slip pre-filled as a courtesy.

3) Bank Bill Pay - Allow 5-7 days for payment of rent performed electronically through your online bank account.