Real Estate Investor · Huntington Beach, CA · Member since 2008 · 221 posts · 9 votes
I've been thinking about a creating a direct deposit account to accept rent directly from tenant checking accounts to mine. I would have to give those tenants using direct deposit the account number. It would save everyone a great deal of time.
The bank says the arrangement is reasonably safe. Have any of you guys done this, and what are your experiences?
Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
12y
I've been using www.erentpayments.com for years, as have others on this site. Very safe, it's a double blind system that debits the tenant's account and deposits it into my business account. $3 per transaction, no contracts, no monthly minimums or set up fees.
I have 2 tenants that deposit their rent directly into my business account at the bank. Not through an ACH - they physically go to the bank and make a deposit. The business account is a deposit-only account. The tenant gets a receipt for the deposit but it does not show the balance in the account, only what they put in. No withdrawals. Been working perfectly fine for 6 years.
Investor · Louisville, KY · Member since 2011 · 1k+ posts · 1k+ votes
12y
I had a savings account set up that I wasn't using...rather than closing it I just cleaned it out except for $0.01 and gave that acct # to the 2 tenants I have wanting to transact that way. I've not had any issues with it and don't expect to.
Depending on the types of tenants you have though, you may want to be careful. If they use your bank acct. info to set up auto billing or try to take funds out of it, you may incur an overdraft fee. It's not likely that this would happen, but it could be a problem with the wrong tenant.
Real Estate Agent · Manchester, NH · Member since 2013 · 120 posts · 159 votes
12y
I have heard of merchants (not in real estate) set up two accounts. Give customers the first account and accept direct deposits, and then transfer the money to the other immediately--easily done online.
i suppose, in the case of regular rent payments, you could set up an automatic transfer to the second account a day or two after the rent due date. But if the rent payment is late, you could run into overdraft problems.
Real Estate Investor · Huntington Beach, CA · Member since 2008 · 221 posts · 9 votes
12y
Thanks, sounds like direct deposit is okay. They say it is no more insecure than writing a check, each time you write a check you are giving away your account number anyways.
Real estate investor · Las Vegas · Member since 2013 · 798 posts · 171 votes
12y
I think direct deposit is best if you can do it. We do a separate account for each renter that they put the money in whether it is via DD or not. It is a pain having several accounts, but it actually make it easier to see how each unit/place is performing.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
12y
What bank products are you using? Not to be negative... I want to learn, but how are you going to do this? Ultimately, these are ACH based solutions, but the question I have is what banking product is your tenant using to achieve the payment? I know teller initiated deposits and Business Deposit Card transactions (via ATM) show up "automatically" in your account, but these are not "direct" from a tenant's account to yours, they require a tenant action to achieve.
I don't think 'direct deposit' is the right terminology for the financial product your are looking for. Your tenant isn't an employer and not a business. The 'direct deposit' solutions are for ACH transactions with (much) greater than 1 entry. You tenant would need to pay from a business account and the fees would be starting at between $10 and $50 per month, plus per transaction fees, depending on the bank... if they allowed no minimum transaction count.
What you are looking for is the tenant to make payments that show up automatically in your account from their checking account. Products that come to mind may be Wells Fargo SurePay service.? The "Bill Pay" services issue paper checks and aren't ACH-based. Neither of these services require bank account information supplied by you.
The third party transaction companies that accept rent payments use ACH transfers set up for volume transactions. No bank information is shared among the provider or to each side of the transaction. The thrid party aggregates and processes tenant initiated or recurring 'direct debit' transactions via ACH with low transaction costs ($0.50 to $3.00 average).
I'd like to know how this will work for you so I can have an option that doesn't involve the ACH intermediary my company uses now.
Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
12y
I've been using www.erentpayments.com for years, as have others on this site. Very safe, it's a double blind system that debits the tenant's account and deposits it into my business account. $3 per transaction, no contracts, no monthly minimums or set up fees.
I have 2 tenants that deposit their rent directly into my business account at the bank. Not through an ACH - they physically go to the bank and make a deposit. The business account is a deposit-only account. The tenant gets a receipt for the deposit but it does not show the balance in the account, only what they put in. No withdrawals. Been working perfectly fine for 6 years.
A tenant would be stupid to let a landlord have their banking info. Good old money orders work very well and is safe.
Joe Gore
I have a number of "stupid" tenants that have given me their banking info so I can do an ACH draft on their account every month for the rent. It doesn't cost them a dime and the fee for me is very reasonable (about $20/month).
Perhaps they feel safer because my property management company is incorporated and has a RE broker on staff per Texas law.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
12y
@Robert SteeleWe looked at an ACH solution, but our minimal cost was higher (about $40+ per transaction, if I recall correctly.) Sounds like you got a good deal. We selected a third party for two reasons 1) cost was reasonable per transaction (from $0 to $3, depending) and 2) tenant "self service" minimized administration. This was a key benefit, especially since we have over 50 registered payers, and the numbers increase perpetually as new tenants replace old.
I'd say this regarding Joe and Robert's comments... as it relates to my company policy and collection management function, which is more or less summed up in our business policies and resolutions: As a business practice, there is no reason to give our banking account information to a tenant, prospect, or vendor.
There is no reason for our company to use paper checks. Our Policies require automated Bill Pay services for vendors. True for trust account disbursements as well. Yes, occasionally there are exceptions. Exceptions, not the rule.
Chicago, IL · Member since 2012 · 14 posts · 0 votes
12y
Has anyone tried Google Wallet or Square Cash to accept rent payments from their tenants. Both are free to send and receive payments if linked to your bank account. Seems like a simple method to collect payments each month. Curious if anyone is using it yet considering they are both fairly new.
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
12y
All my rentals are in a low-income neighborhood and many don't have bank accounts. They deposit directly into my bank account, that I can monitor online, since I'm doing long-distance landlording. It's working well so far
Chicago, IL · Member since 2012 · 14 posts · 0 votes
12y
@Chris Martin. It is free to send money from your linked checking account. Fees only apply if send from your debit or credit card.
From the Google Wallet FAQ:
It's free to send money directly from your bank account or using your Google Wallet Balance. To send money using a credit or debit card, there will be a flat fee of 2.9% per transaction (minimum $0.30).
Las Vegas, NV · Member since 2012 · 75 posts · 3 votes
12y
Wow, some of you get very fancy with how you accept rent. I'm a IT geek during the day, and I don't even do that. I like to keep it simple, and cheap.
I create a coupon much like the ones a mortgage service would give you with my banking information in Excel and have my tenant go directly to my bank to deposit cash into my account using my coupon. That way, no excuses that it's lost in the mail, the mail man, etc and I see it instantly when I login to my account.
One concern I have was bank tellers do sometimes make a mistake and print out the balance of the account and I really don't want my tenants to know how much money I have in that account, so I basically transfer the money to a different account and leave that account pretty low.
Investor · Chicago, IL · Member since 2013 · 20 posts · 3 votes
12y
We use Chase's free Quickpay service, a double blind system. Open a Chase checking acct and register for the service. Tenant's accts do not have to be at Chase but funds transfers faster if they are there. Tenant will have to register for the service, and also register their external acct if they do not bank at Chase. They can manually send in the payment each month, or set up an auto-pay. Landlord can also send payment requests. All the tenant needs is your email address for payment. Sometimes we'll do a $20 test run with a new tenant to confirm they set it up correctly. Did I mention it was free??
Chicago, IL · Member since 2012 · 14 posts · 0 votes
12y
@ChrisMartin. The google service you are looking at it appears to be if you wish accept credit cards as part of an e-commerce website. The service I am describing is for peer to peer payments. When the sender sends from either their bank account or "Google Wallet" balance the transaction is free, If the sender wishes to send from their credit/debit card then THEY will incur a fee of 2.9%, with a minimum fee of $0.30. Either way it should not affect the amount of money going into your account.
GPC may charge fees in accordance with the then-current fee schedule, as stated herein. Google Wallet may assess a fee of 2.9%, with a minimum fee of $0.30, per P2P Payment charged to the Sender for P2P Payments processed through the Service. Such fee shall be waived where your Google Wallet Balance is used for the P2P Payment, or an ACH-enabled checking or savings account is the Funding Account for the P2P Payment.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
12y
@Michael Hoover yes, but as I've said several times I am not the buyer. I am the "seller" in their terminology. Their FAQ isn't consistent with the Terms Of Service Agreement I accepted. Can you tell me definitively that you have collected rent and paid no fees? I know what I'm getting with other services.