How do i collect rent from low income, less-internet savvy tenant

Multi-Family and Apartment Investing
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How do i collect rent from low income, less-internet savvy tenant

Mohammed S.
Investor · Houston, TX · Member since 2013 · 27 posts · 1 vote

Fellow BP friends,

My property manager is struggling to collect rent on time from the tenants in a small (less than 20 units) MF units. The tenants are low income but hard working, blue collar workers who work late hours and typically give cash to the property manager who collects them on site. Hence - she often is unable to collect the rents because of the late hours that some of the workers get home.

Could you recommend a practice/tool that I can use to collect rent from those who are do not own checking accounts and are wary of doing online transactions? Please advise,

The online service www.paylease.com was suggested by quite a few members

Please advise,

Thank you

Mo

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Stewart Guthrie
Roseville, CA · Member since 2014 · 50 posts · 55 votes
11y

Stay away from cash, it's like painting a bullseye on your back. Your tenants in these working class neighborhoods would likely never do you harm, but it isn't hard for other people in the neighborhood to recognize its right around the first of the month and "Hey look, it's that landlord's car..."

A service we use, and I don't know if it makes sense for you because we are actually a property management company, is: 

http://paynearme.com/en/businesses/how-it-works/. 

The residents pay at 7-11 or Family Dollar with a code and it drops directly into your account. 

Hope that helps. 

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  • Bryn Joynes
    Investor · Columbia, TN · Member since 2015 · 21 posts · 7 votes
    11y

    I hesitate to post this but my father collected rents every Friday at 5pm, if no one home then 7pm, if still no answer 6am Saturday morning.  The property manager might not want to do this, especially at 6 in the morning.  People got the idea quickly to be home before 7pm though.  Maybe this might help someone else more than you.

    Bryn

    0Reply
  • Marcia Maynard
    Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    11y

    We have a number of tenants who do not have bank accounts and do not use the internet. They can easily pay rent on time with a money order that they mail to our P.O. Box. I tell them, "Don't be late, mail by the 28th!" They do!

    About half of our 16 tenants set up auto pay with their bank to send a check to our P.O. Box and half pay by either personal check or money order. We collect the mail at the Post Office and then drive a mere three blocks to our Credit Union where we open the mail within the security presence of CU cameras/tellers and deposit the rents into our account. This has been working well for us for 20 years!

    0Reply
  • Logan Hicks
    Business Owner/Investor · Millersville, MD · Member since 2015 · 191 posts · 71 votes
    11y

    Its called a dropbox sir.

    Also, No cash. Never cash. Always money order. Walmart offers them, so does WU, or use certified checks.

    A dropbox doesnt sleep, doesnt eat, doesnt qualify for minimum wages or healthcare benefits, and has a one time fee of ooo...20 dollars? 

    2Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    11y

    No pickup cash.

    Number 1 it's not safe for your property manager and invites a criminal act against them for robbery.

    Number 2 some PM's have stolen money in the past and it is tempting for them when life's  problems are staring them in the face.

    I had an issue years ago where a tenant that pays late but normally pays the rent had not came in. I asked the PM and he said she had told him it was coming in the next few days. This went on for 2 weeks. I went by myself without the knowledge of the PM and they said they had paid cash to the PM 3 weeks ago.

    I confronted the PM and they admitted to taking the money to pay their cell phone and car payment. The PM was made to pay back all the money and was fired from the position.

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  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    11y

    If you have a Wells Fargo near you, get a Wells Fargo Business Deposit Card (WFBDC) they can use at any WF ATM machine. Other banks may have similar type products. Tenant does not need a checking account at WF or anywhere else. They just deposit cash to the ATM using the WFBDC and get a receipt. You get credited on the date/time of the payment. A+ product from my perspective for under-banked and unbanked tenants.

    3Reply
  • Stewart Guthrie
    Roseville, CA · Member since 2014 · 50 posts · 55 votes
    11y

    Stay away from cash, it's like painting a bullseye on your back. Your tenants in these working class neighborhoods would likely never do you harm, but it isn't hard for other people in the neighborhood to recognize its right around the first of the month and "Hey look, it's that landlord's car..."

    A service we use, and I don't know if it makes sense for you because we are actually a property management company, is: 

    http://paynearme.com/en/businesses/how-it-works/. 

    The residents pay at 7-11 or Family Dollar with a code and it drops directly into your account. 

    Hope that helps. 

    4Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    11y

    Money order is the preferred method. Property manager should not have to go pick it up either. Tenants should have to mail or drop off at the property managers office or drop box.

    If the tenants cannot get in line with this then you will want to replace them with tenants who will get in line with it.

    1Reply
  • Account Closed
    Investor · Baltimore, MD · Member since 2014 · 1k+ posts · 688 votes
    11y
    Paynearme....can pay at any 7-11. Google it
    0Reply
  • Nicole A.Pro Member
    Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
    11y

    We also use PayNearMe for our tenants who don't use internet and/or use cash only.

    Someone on here recently told me that PayNearMe told them they only work with landlords that have 100 or more units, but I only have 6 and been using them for many months now. I'm curious though and will call later today to ask them if policy changed.

    If possible, use PayNearMe. But if you allow them to mail it, your lease should state that the rent must be RECEIVED by the due date. Postmark stamps are irrelevant. This will help with the "it's in the mail" excuse.

    0Reply
  • Michele FischerPro Member
    Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
    11y

    How do you collect money from low income tenants.... by any means possible.

    It's great to point out the risks of accepting cash, and to have a policy to not want cash as normal routine, but think it is unrealistic to accept no cash from the truly low income.  If you knock on a door and they wave $300 cash at you to buy some more time, telling them you will come back when they convert it to a money order is silly & you'll be out the $300.

    We pick up rent, allow them to bring us rent, let them deposit in our accounts, and/or mail rent, whatever works for them, because we are nearby and want rent as soon as possible.  Our PM insists that rent be mailed or delivered to her office and everyone can manage one of those.

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  • Michaela G.
    Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
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    I have a Wells Fargo account and tenants deposit rent into that account. I can see online when deposited 

    0Reply
  • Chris C.
    Wholesaler · Easley, SC · Member since 2010 · 340 posts · 249 votes
    11y
    Originally posted by @Chris Martin:

    If you have a Wells Fargo near you, get a Wells Fargo Business Deposit Card (WFBDC) they can use at any WF ATM machine. Other banks may have similar type products. Tenant does not need a checking account at WF or anywhere else. They just deposit cash to the ATM using the WFBDC and get a receipt. You get credited on the date/time of the payment. A+ product from my perspective for under-banked and unbanked tenants.

     This has worked great for us.

    0Reply
  • Mohammed S.
    OP
    Investor · Houston, TX · Member since 2013 · 27 posts · 1 vote
    11y

    Thank you all for your input - very useful. I am exploring paynearme and paylease.com. Will keep you posted on my experience.

    0Reply
  • Kevin Harrison
    Investor · Woodbridge, VA · Member since 2015 · 476 posts · 197 votes
    11y

    I personally like the dropbox idea. If you have 20 tenants it might be worth it to pay around $500 or so and have one "installed" or built into the property. Preferably heavy duty and hard to steal, although I would discourage cash anyway.

    This will be money well spent since people can drop off their rent anytime its convenient for them, and you just let them know you will pick it up on X day of the month and if its not in there its late.

    This will keep you from having to make multiple trips and avoid any "its in the mail" excuses, its either in the box or its not, no fuss no muss... just my .02

    0Reply
  • Nick L.
    Buy & Hold Investor · Milwaukee, WI · Member since 2012 · 378 posts · 179 votes
    11y

    @Kevin Harrison Are there dropboxes that offer automated stamping and receipts? Otherwise I could see this leading to a lot of disputes over whether and when the money was deposited.

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  • Kevin Harrison
    Investor · Woodbridge, VA · Member since 2015 · 476 posts · 197 votes
    11y

    @Nick L. I don't know, but its fairly simple if its just a box. you pick it up the day it will be considered late (so if its considered late after the fifth pick it up the morning of the fifth) and if its not there then obviously late and not paid.

    I mean if you put it in the box it will be there, there's not much to get messed up with that. I don't care what the tenant says there's no way someone broke in and stole only their rent and not anyone else's. I would add an addendum that if the rent is late it has to be turned in, in person or something of that nature to the lease. If rents due on the first but not late until the fifth then what the point of picking it up before the fifth in a dropbox scenario? that's just a waste of a trip.

    When I spoke of having one built in I mean like built into a wall or maybe a brick box out front with heavy duty doors that someone cant just pop the lock on or walk away with, something similar to a book or mail drop box where you cant just stick your hand in there. IMO this would be the easiest scenario for your long term problem if you continue to rent to this type of tenant. 

    I would just set up rules in the addendum about how you mark your payment, IE. "payment must be in an envelope with tenants name and APT# written in large print on the outside", so no one's payments get mixed up. Lets be honest you don't want them just dropping checks or wads of cash into the drop box. 

    0Reply
  • Larry K.
    Investor and Architect · Ramsey, NJ · Member since 2010 · 305 posts · 84 votes
    11y

    I'll second the no cash.

    I like direct deposit. They just go to your bank and deposit the rent themselves. They email me text me a photo of the cash and slip.

    0Reply
  • Derrick Craig
    Memphis, TN · Member since 2013 · 969 posts · 524 votes
    11y

    Direct Deposit!!

    0Reply
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