Tenant accustomed to current landlord picking up rent payments...

43 Replies

Hi,

I just wanted to get some typical ways some of you landlords receive rent payments. I'm about to acquire rental properties where the long term tenants are used to the current landlord driving by each property and picking up the tenants cash rent. I, however, don't want to make the drive EVERY month to pick up cash to then drive to bank to despite, etc. The tenants are on the lower income side and seem not to be interested (or maybe unable; not sure) to open bank account to pay by check or transfer. I assume the only other way is for them to get a cashiers check or money order and mail to me? Eh, that seems slow. is the the next common way after cash pickup? Is there any other way you landlords have incentives for your tenants to find an alternative? Thanks BP!

Money orders work, you can give them an acct# and they just go to a branch and make the deposit manually as well. What about them loading prepaid cards and transferring money to you online? Walmart does billpay for low income customers as well

I haven't run into this problem but I feel for you. There are tons of methods of payments, I'm sure you can find one that doesn't involve you manually picking up a check. 

I will say this though, from a long term perspective I highly encourage you to work this out and find a solution BEFORE this behavior involves you. What I mean is, you don't want to go down there and get a check like that ever, even the first one. Once you do, you have set the relationship dynamic and it gets harder and harder to change once they think they can use the same methods as before. So let them know you won't be doing business like the old landlord and give them options to pay that are most convenient for you. 

This is part of why I got out of low-income. 

If you only have to go once a month,  consider yourself lucky. I had an inherited tenant that expected twice a month pickup, and if payday is Friday, and you get there Monday, don't expect money: It's already gone. 

Cash is nice... you sure you don't want to pick it up?

You just have to tell them to mail you a money order, they can buy them at any minute market. They wont, you will file eviction and they will learn or get out... simple as that. If you don't want to chance losing them because they are long term (and lets face it, low income and long term almost NEVER go together) don't even start down this road... just keep picking up the rent like the last guy did.

You need to train your tenants.

It takes some time but if you are patient you can have your tenant make a deposit every month.

They can also buy a cashier's check and send it on the mail but sometime you get the BS that they already sent it and it may be lost on the mail. 

Better to train them to make a deposit.

If it were me (and is had been) I would probably not try to retrain the tenants if they are long time cash payers with a good track record.  Perhaps you can gauge whether or not your tenants can be retrained, but I've had some that weren't worth rocking the boat over.

There are many variables why some low income people pay rent in cash:  ID, privacy/paranoia, transportation, money management, etc.  I'd open a bank account for the property very nearby where they can easily deposit cash.  If that's not possible I'd find a local business where they could drop off the rent.  Or I might use a local handyman or PM to pick up the rents (that's worked best for holdover tenants who were used to paying cash).

When I rent to a tenant part of the screening process means that they be responsible people.  This means paying their rent on time.  This means licking a stamp and depositing the rent payment into a mail box or driving to a post office.  

When I select a tenant for my properties, they must be COLLECTIBLE.  They must pay their bills on time.  And some of our properties were in low income areas.  Our properties were in the City of Detroit and outlining areas, so I dealt with all manners of people and personalities. 

When I rented out a house I told the tenants that they were responsible for getting their rent money into my office on or before the due date.  That I didn't come by and pick it up.  That if they couldn't take the time to pay their rent to me, like everyone else, then they could do the same thing too. It is a part of being responsible.  And if they couldn't do that, then they no longer qualified for this rental unit.  

One thing I learned in this life,  is that you don't enable people.  In order for people to become responsible adults you need to make them accountable for what they do in life.  This means even the simplest things such as putting their rent payments in the mail themselves.

Many of my tenants thanked me for teaching them how to be good business people.  When they paid their rent on time, I reported it to the Credit Bureau.  I had an account with the credit bureau to where they did my credit checks and I reported my tenants payment history to them.

When the tenants were ready to buy a house, according to their payment history, I told them to give my name as a reference.  

Sometimes we feel we are helping people by going out of our own way to help them out.  When in actuality we aren't doing them any favors at all. 

How many times would you take time out of your busy schedule, pay for gas, at the prices they are today, to drive to the rental home and the tenant was not home even though they said they would be, when you called them to tell them you would be right over to collect their rent.  How convenient for them to say something came up, and then you do it all over again.  And pretty soon, there is no more trust between the landlord and tenant?  

Why make being a landlord a hardship on yourself?  Does your mortgage company come by to collect their mortgage payment from you.  Your doctors office.  Who comes to your house to collect their monthly payment from you as part of their service?  Then why do we feel that we need to do it when we are so busy as it is?

Nancy Neville

@Chad Hurin

For your type of renters, PayNearMe might be a great option. All they do is bring their rent money to a nearby 7-eleven or such and pay a $3.99 fee. The clerk gives them a receipt. You instantly are notified of a payment and that payment is transferred to your bank account within a few days. My tenants seem to love it.

I don't think you should waste your time driving to pick up rent. They are adults and you are the new guy in charge so whatever the last landlord did is irrelevant.

The hardest part for me about PayNearMe was getting set up and verified to receive payments. So if you use that option, be sure you're all set up before offering the service to them.

Originally posted by Kristine Marie Poe:

If it were me (and is had been) I would probably not try to retrain the tenants if they are long time cash payers with a good track record.  Perhaps you can gauge whether or not your tenants can be retrained, but I've had some that weren't worth rocking the boat over.

There are many variables why some low income people pay rent in cash:  ID, privacy/paranoia, transportation, money management, etc.  I'd open a bank account for the property very nearby where they can easily deposit cash.  If that's not possible I'd find a local business where they could drop off the rent.  Or I might use a local handyman or PM to pick up the rents (that's worked best for holdover tenants who were used to paying cash).

 I agree with K Marie.  I've picked up rent before, but I don't mind.  There are two benefits.  The first is getting paid in cash.  The second is I get at least a monthly look at the property.  Usually, the tenants invite me in while they are paying me, so I get to see the inside of the home.

I understand that some landlords might not want to pick up rent payments, but I don't think it's fair to insist existing long-term tenants conform to your new payment plan.   Making the tenants aware that you are making other options available is a good idea, but I would give them options, not demands.   If a pickup is out of the question, I would say you have to deal with the two or three-day delay in having the rent mailed to you.

However, I know some landlords will insist it's their way or the highway.  It's your property, so the bottom line is you get to run your business however you see fit.

Wow,

Thanks for every ones response. 

@Judah Hoover - So, yea, I like cash. I see your point about not rocking the boat but... IDK, I'm really into convenience. It's about 30 minutes from my home and if you have due date the 1st but late after the 5th - i may need to run over the 3 times (number of tenants)..Thoughts?

@Nicole W. - Yea, Ill check them out. I've seen something else similar to this service. Seems like it makes it easy for the tenants. 

@James Wise - Yea, I may just open up a bank account near them and give them another option such as the one @Nicole W. gave. Ill see how it goes.

Thanks again. I may give an update on how things go 6 months down the road. Take care!

This is a good thread. I am going through this now. I currently collect everything in person from my lower middle class tenants. I established this because it was simply the easiest thing to do with one property that I self manage. I would like to go electronic but my tenants are resistant.

One tenant banks with Chase (as do I). They are skeptical of Quick pay for some reason.

The other tenant has no bank account or internet/computer access. They always pay by money order.

Two other tenants I could probably get on a new/electronic plan.

Originally posted by @Nicole W.:

@Chad H.

For your type of renters, PayNearMe might be a great option. All they do is bring their rent money to a nearby 7-eleven or such and pay a $3.99 fee. The clerk gives them a receipt. You instantly are notified of a payment and that payment is transferred to your bank account within a few days. My tenants seem to love it.

I don't think you should waste your time driving to pick up rent. They are adults and you are the new guy in charge so whatever the last landlord did is irrelevant.

The hardest part for me about PayNearMe was getting set up and verified to receive payments. So if you use that option, be sure you're all set up before offering the service to them.

I tried Pay near me. When calling to set it up I was told I could not do it beacause I am a sole propriter with one proeperty.

Originally posted by @Account Closed :

When they paid their rent on time, I reported it to the Credit Bureau.  I had an account with the credit bureau to where they did my credit checks and I reported my tenants payment history to them.

What "credit bureau" are you referring to?  Which national credit reporting agency made it feasible for you to have an account so that you could report monthly rents?

@Jarrett Harris

 Are you sure you talked to someone who knows what they're talking about? I never heard of such rules. I guess it's possible, but it seems stupid.

@Chad H. if you lost these tenants how easily could they be replaced? How much work would it take to make the property rent ready? Only you can make the call on weather you are willing to risk it or not. See if you can get them to pay by mail with money order. That seems to be your best bet. MAYBE you could even promise not to raise the rent for 2 years if they stat paying by mail! Find a way to incentivize them.

@Jarrett Harris - Glad to see others are going through the same. Vote at top; i think it helps with exposure-not sure. Yea, to me that seems just... idk.. too inconvenient. If they pay for other bills online or in store (Wal-mart, 7-11, etc) for cell phone, insurance, or cable they should be able to pay rent as well. I asked this question preparing myself to come up with a way to switch with an incentive or a norm.. etc. but you @Jarrett Harris if they're refusing to pay online... idk, maybe put it in next lease that its mandatory to pay by depositing in a bank or the like. 

@Account Closed - Yea, im interested too. You report their on time and late payments? sounds like a good thing to offer and incentive to pay on time. I came across a site www.erentpayment.com that reports but not sure how to report without going through a payment processing site.

Thanks!

Originally posted by @Chad H.:

@Jarrett Harris - Glad to see others are going through the same. Vote at top; i think it helps with exposure-not sure. Yea, to me that seems just... idk.. too inconvenient. If they pay for other bills online or in store (Wal-mart, 7-11, etc) for cell phone, insurance, or cable they should be able to pay rent as well. I asked this question preparing myself to come up with a way to switch with an incentive or a norm.. etc. but you @Jarrett Harris if they're refusing to pay online... idk, maybe put it in next lease that its mandatory to pay by depositing in a bank or the like. 

@Nancy Neville - Yea, im interested too. You report their on time and late payments? sounds like a good thing to offer and incentive to pay on time. I came across a site www.erentpayment.com that reports but not sure how to report without going through a payment processing site.

Thanks!

Yep Chad you are right. That is what I will do from now on. It will be in my lease to either Quick pay me through Chase or some other form that does not require me to pick it up.

@Judah Hoover - Yea, I understand. I also don't want to be their prisoner. Like @Randy E. said... ultimately its your decision. What If i'm gone when rent is due then need to find someone to pick it up (possibly even have to pay for that) or while your at Walmart getting groceries get a money order and some stamps or use their bill pay options (if they have that).   And @Account Closed .

IDK, any more thoughts?

@Chad Hurin

 If you don't have an office, I would set up a P.O. Box - have tenant mail in their rent. This in the form of check or money order if no checking account. This way you establish a record of their payment. If a check bounces, you only accept money orders or cashiers checks from then on. You don't want to get into a "tenant claims they paid" but "owner says they didn't" how do you or the tenant prove otherwise? 

Do not give the tenant your account number to deposit rent/if you have to evict (check local laws) they may be able to make a small deposit to restart the eviction process since you in effect "accepted" money from them. 

If the tenants are resistant, and do not mail in their money - you send them their "Pay or Quit/Eviction" notice, they will be more apt to respond once they get that notice. If you feel like this is heavy handed, you might not want to be in lower end rentals, tenants will eat you alive. Set the stage early for how to handle your rental. 

Good Luck!

Pickup money order only...or else you become predictable...and could get robbed. Also acts as everyones receipt.

@Chad Hurin

 Likely if they are long term tenants they are on a month to month lease - if not they would have renewed their term each year (which I doubt, but depends on previous owner). If month to month, I would want to get my own lease signed as soon as possible, meaning when theirs month to month for the current term expires. Just make sure you have a good lease. 

Unless the lease states that the owner will come by and pick up cash, you send them a letter notifying them that you are the new manager of the property (which is true, you create a separation between you the manager and you the owner). The new procedure will be for them to mail into the P.O. Box, you aren't sending them the Pay or Quit notice for the way they pay, it is if they do not send in the rent, then they are in breach of paying their monthly rent obligation. 

The issue is that I would gamble they will not pay via money order to your P.O. Box the first month, so you will likely have to take steps to ensure you receive your money. I can't imagine driving to each property to collect cash, some people will have excuses instead of cash, then you have to drive back out. 

 @Chad Hurin :
 

 Chad, I didn't realize the property was 30 minutes from you.  In that case, I'd suggest you just have the tenant mail the payment to you if they can't pay by computer.  None of my properties are more than 10-minutes from me. 

Also, regarding timing, I never go to pick up the rent unless I've talked to a tenant first.  Usually, I'll get a call a few days before the first saying something like "can you come at 9:00 Wednesday morning to get the rent?"  On that morning, I'll text to verify, take the kids to school, drive four minutes from the school to the property, collect the rent, and be on my merry way.

Good luck,