Rental Payment "Backup"

[Ben Bakhshi]

Hi all,
I'm in development of cloud software applications for landlords. I'd like to get your input on some brainstorming I have been doing which may contribute to the development of new software.

Would landlords be interested in a service that provides a backup, or insurance, on rental payments?
The service, which involves the tenant's participation and explicit agreement with the landlord, allows the landlord to charge the tenant's credit card if rent has not been paid on time. Fees would run about 4%, which could be charged to the tenant as a late fee, and the landlord receives his full rent amount, with a one-day wait to receive the charged funds in their bank account.

If you would like to answer my mini-questionnaire, feel free to reply privately!:
1. How many units do you own/manage?
2. How many times did that occur to you?
3. What keeps you up at night as a landlord/prop. manager?
4. What problems have you experienced collecting rent?
5. Have you ever had a tenant pay rent late? If so, approximately how many of your tenants have ever paid rent late.
6. Do you rely on monthly rental income for ongoing business expenses, mortgage payments, etc?
7. What methods do you use to collect rent, and how frequently? Cash, hand-signed check, automatic transfers, money-order, MoneyGram/Western Union.

If you are interested in staying in touch with me and potentially becoming an early user and tester of the service, please let me know and provide your email address to be in touch.

[Bill Gulley]

Are you financially prepared to meet the startup for a collection agency, some considerations;

License requirements in each state:
Accepting rent payments for owners may likely require a Real Estate license,check with the RE Commissions. Technically, acepting consideration for rent is in the function of renting real property.
Check on the requirement as a collection agent, bond requirements and insurace for errors and ommissions*.
Will the state insurance commission consider you an insurance plan?

Clearings will be through an escrow account collecting and remitting payments for others regardless of the method of payment.

Your liabilty: Landlord says rent wasn't paid, how do you verify that?
You tag a credit card and payment was made by the tenant, you going to do refunds? You make a mistake and double charge, then what? *Insurance and bonds are written to insured based on experience, without experience, such can be expensive if you can obtain coverage at all.

What keeps a tenant from terminating the card? What happens in the event of ID theft, where the lender terminates usage? Remember, you charged the landlord for clearing services say for the month of July and the card wasn't active, maybe inactive for months, are you going to refund the service fees since you couldn't provide the service intended?

I can think of more issues, might solve these first, sounds like a good idea. It may not be practical in real life.