How do you collect rent from lower income units?

Question

Hello everyone,

I have a couple of multi units in Mansfield Ohio (6 unit and 8 unit). They are both lower income type properties ($300 to $325 per unit). How do you collect payment from these lower income rental units. Going door to door is out of the question! I am hoping for some good ideas!!

Thanks

Dave

Aaron Mazzrillo · Answer

Start with a big stick! LOL

I give each of my units a zero valance account and a stack of deposit slips. I then tell them to go to the bank and make the deposit at the window. The deposit receipt will be their rent receipt. 10+ years and not a problem yet.

Joel Owens · Answer

Sorry David but there is nothing remotely passive about low income tenants.

I hope you didn't buy your properties based on that assumption. Low income tenants scrape by and do not have much if any disposable income. One minor blip in their lives can send everything in a tailspin.

I hope you priced in a property manager at 12% for rougher areas and lower income tenants when you bought your properties. If you didn't account for the higher number you might have overpaid.

Jon Kepler · Answer

Dave, why is going door-to-door out of the question? Is it just a personal safety concern?

Going door-to-door is very beneficial. It's a great way to keep on top of maintenance concerns, tenants who break the rules (eg. no-pets clauses), and more. If you don't want to do it yourself, perhaps you can pay someone you know $20 or $30 to do it for you.

Jay Hinrichs · Answer

@Phil C.

problem with that is most of the lower end tenants do not have computers at their homes they may have smart phones but.. collecting rent in that space is a tough

Phil C. · Answer

One idea was email monthly rent invoice slip with a prepaid envelop for the tenants to print and mail or just mail back. Its a little more work on your part but it seems to work.

FOr online transactions, Chances are low incomers don't have or don't know how to send etransfers.

Account Closed · Answer

We have all of our tenants deposit into a special bank account, they do not need to have their own bank, account they can deposit at any B of A branch. This has worked great for us for the last four years and we are notified the minute they make the deposit.

Jay Hinrichs · Answer

@Michele Fischer

Michele you can do that in Longview your not going to do that in most of the mid west and especially tenants that live in 300 dollar units. safety issues

@Darrin Carey

DArrin this was the hardest thing for the Australians to get over.. they just can't imagine that all US citizens do not have checking accounts and that the rent is not ACH'd on the 1st of the month... or bi weekly like they do there....

And why do these people not have checking accounts ( because they can't get them they have bounced to many checks and are in the BAD bucket that is a national data base)

Engelo Rumora · Answer

@David Hendrix

Having the right property manager that caters for the particular area and quality of tenant is vital and also worth every penny of the 10% most will charge.

Lower end areas would require for collection to be door to door. There are the odd tenants that can be trusted with depositing a check or even delivering to us but most are just not trustworthy enough.

Thanks for reading and have a great day.

Darrin Carey · Answer

I have all my tenants mail the rent in. Use a PO Box if privacy is a concern. None of my low income tenants have bank accounts, so I get a lot of money orders.

Dayton is a little bigger than Mansfield, but it works the same everywhere.

I have not had any tenants use e-checks, and the debit card fees are bit high in my opinion.

Annette Hibbler · Answer

If you're going to continue investing in low-income units, I would suggest you employ a good property manager. You do not want them knowing how to contact you directly and definitely knowing where you live. That's just crazy. You obviously don't feel comfortable going there in person which indicates the environment is less than safe. Be prepared to go through a few PM until you find one that works well for you. Good luck.

How do you collect rent from lower income units?

How do you collect rent from lower income units?

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