{"id":109491,"date":"2019-04-08T12:00:01","date_gmt":"2019-04-08T18:00:01","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=109491"},"modified":"2021-03-16T14:53:14","modified_gmt":"2021-03-16T20:53:14","slug":"rent-collection-method","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/rent-collection-method","title":{"rendered":"My Favorite Rent Collection Method (Shocker\u2014It’s Not Electronic)"},"content":{"rendered":"

I love technology, and finding new and more streamlined ways to use it to do everyday tasks is fun for me. My banking, accounting, calendar, communication, task management, project tracking, and hard money loan<\/a> underwriting are all done electronically.<\/p>\n

I’ll move as many other tasks as I can to an electronic system, too. For instance, I scan in receipts and contact info so I don\u2019t have to keep paper.<\/p>\n

I always have multiple businesses and volunteer projects going at once, so being able to multi-task using a device is pretty important for me.<\/p>\n

All of that being said, it may surprise you that my rent collection method is decidedly old school. Here’s what I do, and why I do it.<\/p>\n

How I Collect Rent<\/h2>\n

Are you ready? I pick up the rent at the property.<\/p>\n

Tenants place their checks in a locked mailbox at the property by no later than 7 a.m. on the due date, which is the 25th of the month (more on that later). The mailbox has a slot similar to this one below.\"\"<\/p>\n

I drive to the property, snap photos of the checks to deposit using my phone, and walk the building. Sometimes I see a tenant; more frequently, I don\u2019t. I\u2019ll chat if I do.<\/p>\n

I also arrange to meet my maintenance person there, pay him, and discuss any issues he is dealing with or tasks on his plate.<\/p>\n

“WHAT? And waste all that time? Why on earth?” some of you are probably asking, wondering if I also grew up with rotary phones.<\/p>\n

Hear me out though. Here’s why I do this.<\/p>\n

Property Condition<\/h3>\n

Going to each property forces me to pay attention to the condition of the property and not assume that everything is fine. I can see for myself.<\/p>\n

If something needs repair or replacement, I notice. (Yes, I\u2019ll admit to being a control freak.) I take a minute to walk around, and I can discuss it on the spot with the maintenance person.<\/p>\n

Related: <\/strong><\/em>Hiring a Property Manager vs. Self Managing: What\u2019s Better?<\/a><\/em><\/p>\n

Tenant Relationship<\/h3>\n

Because I see my property\u2014and sometimes the tenants\u2014on a regular basis, my renters know that I am involved and aware. It can head off problems before they start.<\/p>\n

Can this be a detriment if the relationship with the tenant<\/a> deteriorates for other reasons? Absolutely.<\/p>\n

It is not possible for me to be just \u201cthe property manager.\u201d They all know I\u2019m the owner. If I tried to pretend, I\u2019d for sure slip up and give it away, and then they would know I was lying. That\u2019s just me.<\/p>\n

But because I\u2019ve screened carefully for excellent tenants<\/a>, I seldom have issues. So, staying in touch occasionally is a positive on both sides.<\/p>\n

I once saw someone write on BiggerPockets: \u201cBe nice to your tenants. They are buying you a building.\u201d It’s too true!<\/p>\n

Another reason I like to keep close tabs on my renters is that many of my properties are what I call \u201cstarter units.\u201d It may be the tenant\u2019s first apartment, they might have their first real job, or they may be broke and starting over after a divorce.<\/p>\n

In other words, they don\u2019t always have their financial affairs in peak condition. Some of them still like to use money orders to ensure they don\u2019t bounce a check.<\/p>\n

If that\u2019s the case, trying to set up electronic payment methods can be difficult for them\u2014especially if they don\u2019t pay for internet\u2014so fighting the tide is harder than working with it.<\/p>\n

Maintenance Person Relationship<\/h3>\n

Like I mentioned, I pay my maintenance person monthly during the same visit as the rent collection. It\u2019s an opportunity for him or her to keep me up-to-date on things that might not be immediately evident.<\/p>\n

And as his day job’s schedule changes occasionally, or he has vacations or family time planned, we can work out coverage and supply issues. This has paid off with multi-year loyalty from my current maintenance person, so since it ain\u2019t broke, I ain\u2019t fixin\u2019 it.<\/p>\n

\"first-property\"<\/p>\n

Related: <\/strong><\/em>Why Good Maintenance is the Best Way to Retain Tenants<\/a><\/em><\/p>\n

Rental Period<\/h3>\n

Now, I\u2019ll talk about why my rent is collected on the 25th. A guru discussed this plan. (It may have been Jeffrey Taylor?)<\/p>\n

I don\u2019t collect on the 25th for the rental month 1st through 30th, I collect on the 25th for the rental period 25th through 24th. It\u2019s illegal in some states to hold more than a specific amount of money in advance though, so be sure to comply with your state\u2019s laws when making this decision.<\/p>\n

Why do I do this?<\/p>\n

When I started, I needed to make sure to collect rent before my mortgage payment was due. That way, if I had to wait for a check to clear (or bounce), I still had the mortgage funds in time for the 1st.<\/p>\n

Later, as I moved into commercial mortgages, it became less important. Those don\u2019t always start on the 1st, and I had reserves. But it was a lifesaver when starting out, and I didn\u2019t want to change midstream.<\/p>\n

Caveats<\/h3>\n

This won\u2019t work if you are trying to scale. My hard money lending business grew to full time, while my rental properties didn\u2019t.<\/p>\n

I\u2019m not good at managing a property manager. I preferred to manage tenants myself, as screening is the most important part of rentals<\/a>. Maintenance of the properties was easy with a maintenance person and a few trusted contractors. So, I let it stay small.<\/p>\n

If you are aiming for hundreds of units, I don\u2019t recommend this approach. If you are buying property out of state, it won\u2019t work either.<\/p>\n

You\u2019ll need to focus on how to find a good property management company<\/a> and not try to do it yourself. But if you are like many investors on BiggerPockets, you aren\u2019t there yet. So, I encourage you to consider if this low-tech approach will work for you and help you keep tabs on your property.<\/p>\n

\"\"<\/p>\n

What do you think of my rent collection method? Would you ever try this approach?<\/em><\/p>\n

Comment below!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

I love technology, and finding new and more streamlined ways to use it to do everyday tasks is fun for me. So, it may surprise you that my rent collection is decidedly old school. Here’s what I do, and why I do it.<\/p>\n","protected":false},"author":5181,"featured_media":78117,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5183],"tags":[],"class_list":["post-109491","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-landlording"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/109491","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/5181"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=109491"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/109491\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/78117"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=109491"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=109491"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=109491"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}