Paying rent with Cash - Simplifying processes

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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes

Our tenants pay rent with cash. Some send money orders, some deposit cash in our account, but a majority used PayNearMe to pay at family dollar locations. Now the Family Dollar in our area will no longer accept PayNearMe.

What are some alternative options?

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James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

11y

I used to be a very big fan of tenants depositing money into my bank accounts but found on a larger scale it does not work out that well.

One problem is they never completely fill out the slip. They leave out important information such as their address, name and or unit number.

One solution to this problem was suggested by @J Scott which is to hand them out pre-printed slips. I have been there and done that. Unfortunately a large amount of tenants will loose their slips every month, thus creating more issues for the landlord.

As I have scaled up the number of rental units I have found that the very best and simplest method is they must have their money order or cash at our office on or before the due date. They can mail it, hand deliver to our drop box or come inside during business hours and hand it to a Holton Wise employee. Obviously tenants are told that a money order is the way to go if they are mailing or dropping rent in the box.

Doing it this way allows you to overcome common objections and excuses tenants will have for each of the ways they can deliver to us the rent.

"It's in the mail"------Should have hand delivered it.

"Your office is closed by the time I am off work"------Drop box is open 24/7.

"I don't have a car"-------Put it in the mail.

One more issue I have with direct deposit rent collections. A savvy tenant can stall the eviction process by depositing a partial rent payment in your account and receiving a payment receipt from the bank teller.

If they come in with a partial payment you can refuse it. If they mail or place a partial payment in the drop box you can refuse payment by not cashing it.

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Cal C.
Investor · Peachtree Corners, GA · Member since 2014 · 1k+ posts · 1k+ votes
11y
I think they take paynearme at 7-11.
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Brie SchmidtBusiness Member
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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
11y
They do, but there is not one near our properties. They do not have a single payment location in the two zip codes we have properties in now.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
Brie this may be inefficient but one of my clients back in the day... He owed about 200 doors in Alameda CA... he collected the rent personally... He had tenant put check or money order in envelope and pin it to the front door.. the doors looked like pin cushions.
He picked up rent on the 5th and 10th.. If the check was not there he filled out a quit notice and pined it up.
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Brie SchmidtBusiness Member
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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
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@Jay Hinrichs I am trying to avoid my PM driving around picking up rent for all our units.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Brie Schmidt I hear ya.. Art was a little odd... as he self managed all these properties.
He also like to check them out monthly if some one had a car leaking oil boy they would hear about it...
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Timothy Gleason
Military · Pensacola, FL · Member since 2014 · 53 posts · 63 votes
11y
@Brandon Turner @Brie Schmidt This is a great "Ask BP" topic, as the Family Dollar/PNM fallout/pullout has affected many of us. Looking forward to some creative responses.
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Brie SchmidtBusiness Member
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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
11y
@Timothy Gleason that would be a great idea!
I didn't even know till my tenant called me from the family dollar and put the store manager on the phone
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Vincent Crane
Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
11y
You need to set up some form of online payment or do checks that they mail. There's no way anyone should be driving around picking up checks from them, and definitely no way that you should be accepting cash. One of these times you'll hear, "I put the envelope in the mail or at your door with all my rent in cash and now I can't pay it" when in reality they never did.
3 Reply
Devin Scott
Investor · Milton, DE · Member since 2015 · 65 posts · 14 votes
11y
@Brie Schmidt, have you thought about a local PO Box, where they could drop in a mail slot? If cash, you still may have an issue of them saying they put it in when they really didnt, but that can be an "at your own risk" option.
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RJ Peralta
Allentown, PA · Member since 2015 · 30 posts · 5 votes
11y
I'm a former tenant up here in the Northeast and almost every landlord here either does bank deposits or cash that they pesonally pick up. As a new landlord I'm setting it up as direct deposit only. My bank isn't going to like it when I tell them "I can't pay you 'cause my tenant said he put the cash in the mail....."
1 Reply
Robert M.
Investor · Erie, PA · Member since 2014 · 128 posts · 65 votes
11y
@Brie Schmidt All my leases now require tenants to (ACH) electronic direct deposit into my checking account. It is on time if credited by MY bank to me BEFORE first of month. ( they then get to pay early pay amount.). On first they pay rent amount and and day after the first thru and including the 6th, they pay $50 LATE FEE, on 6th I file for eviction.
I have also had new tenants use Paypal and pay to my email address.
Both ways are no cost to either of us and it is all electronic with good records through the bank .
good luck.
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Brie SchmidtBusiness Member
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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
11y
@Devin Scott and @Vincent Crane
We do offer the option for them to mail money orders, or they can deposit cash into our account - but over half used PayNearMe so I would like to find a replacement for those tenants. We do not allow them to mail cash.
@RJ Peralta and @robert m - most of our tenants don't have checking accounts, or computers at home - so direct deposit is not an option for us
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Adam Johnson
Rental Property Investor · Holley, NY · Member since 2011 · 507 posts · 347 votes
11y
@Brie Schmidt - in my opinion, you already have your solution and it simplifies things for you. It may take a little bit of "re-training" your cash tenants, but just get them to start depositing payments at the bank instead.
We send out monthly statements showing all unpaid balances as well as the new month's charges. We send them out around the 20th of the month and show the upcoming rent due. In the envelope, we include a deposit slip already filled out with our account name and number on it, along with a blank line for them to write in their unit and address. Pretty cheap to do, we pick up a stack of blank slips at the branch once in a while and had an ink stamp made up with our account name and info.
Keep it simple! It is nice to offer a lot of options, but the cost is that it makes your life more complicated. When we first implemented our system, we met a fair amount of confusion and resistance. Now our tenants LOVE it. They walk away from the teller window with a receipt. Our bank tellers are now "trained" to put the unit number in the memo line of the transaction, so within an hour it shows up in our online banking portal. Everybody wins and nobody has to pay any special fees.
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J ScottPro Member
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Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
11y
Why not just print out a dozen bank deposit slips for each of your tenants, and tell them to find the nearest branch of your bank (hopefully you have a bank that has a lot of branches) and make a deposit. They can pay with/deposit cash or checks...up to them...
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Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
11y
Tenants can mail in rent. If they don't have a computer at home, many times they have a phone they can log on with. It can be impossible to convince some tenants to get a bank account.
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Brandon Schlichter
Real Estate Agent · Circleville, OH · Member since 2008 · 633 posts · 488 votes
11y
Are there any good/useful methods for having a tenant direct deposit it into a account at a bank (They show up to bank, have them deposit it in the rental account via a slip/deposit ticket set up specifically for them)?

I've asked my local bank about this and they said it was fine, as the deposit ticket is scanned and I get a copy a day after it's done via my online banking. My concern however is that the deposit ticket has my company's bank acct # on it. What are your thoughts?
1 Reply
J ScottPro Member
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Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
11y
Originally posted by @Brandon Schlichter:
My concern however is that the deposit ticket has my company's bank acct # on it. What are your thoughts?
Nothing to worry about...
Every check you write has your company's bank account number. Millions of checks per day with bank account numbers change hands among untrusting parties -- if there was a risk there, the banks would change the system. An account number without any additional credentials is worthless...
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4 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
11y
I used to be a very big fan of tenants depositing money into my bank accounts but found on a larger scale it does not work out that well.
One problem is they never completely fill out the slip. They leave out important information such as their address, name and or unit number.
One solution to this problem was suggested by @J Scott which is to hand them out pre-printed slips. I have been there and done that. Unfortunately a large amount of tenants will loose their slips every month, thus creating more issues for the landlord.
As I have scaled up the number of rental units I have found that the very best and simplest method is they must have their money order or cash at our office on or before the due date. They can mail it, hand deliver to our drop box or come inside during business hours and hand it to a Holton Wise employee. Obviously tenants are told that a money order is the way to go if they are mailing or dropping rent in the box.
Doing it this way allows you to overcome common objections and excuses tenants will have for each of the ways they can deliver to us the rent.
"It's in the mail"------Should have hand delivered it.
"Your office is closed by the time I am off work"------Drop box is open 24/7.
"I don't have a car"-------Put it in the mail.
One more issue I have with direct deposit rent collections. A savvy tenant can stall the eviction process by depositing a partial rent payment in your account and receiving a payment receipt from the bank teller.
If they come in with a partial payment you can refuse it. If they mail or place a partial payment in the drop box you can refuse payment by not cashing it.
6 Reply
George P.
Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
11y
what about asking the nearest Realtors office to put a mail slot in their door just for u and you pay them a fee each month? like ups drop off place.
it's a stretch, I'd personally fine them late fee 3 times and they will all learn how to click that mouse button really fast.
1 Reply
Scott Weaner
Rental Property Investor · Yardley, PA · Member since 2008 · 1k+ posts · 561 votes
11y
@James Wise
eRentpayments gives the option to not accept partial payments. this is what I am now using, and except for a couple of glitches on our end, it seems to be working. I make it a requirement for the tenant, but I pay the $3/month fee.
2 Reply
Adam Johnson
Rental Property Investor · Holley, NY · Member since 2011 · 507 posts · 347 votes
11y
@Brandon Schlichter - as an extra precaution, we use a separate account ONLY for receiving these payments. We go in every day or so (online) and move most of the money into another account. We leave enough in the account (maybe 500-1000 to cover us just in case a tenant deposits a check and it bounces, but we haven't had that issue yet. Most of the time the ones that use this option deposit cash.
As to @James Wise's mention about the partial payments, I have given that thought too. What I am about to say is not legal advice! I have thought it through though. In the event that a tenant attempts to try this stunt, I will continue all the way up to the court date for the eviction and go to court with that exact amount of cash in hand, then explain to the judge that they directly deposited a partial payment into my account but I have brought it with me to court as I am not accepting their partial payment at this time. I would think that a reasonable judge would allow this, worst case forcing me to hand the partial payment back to the tenant, which I will be prepared to do in cash. I haven't tested this theory and this is not me giving legal advice!!!! My experience with evictions so far is that once they stop paying, they stop paying. Once I serve eviction court notices, I don't accept partial payments unless they show up to court with a substantial payment. If they have been a pain in the a$$ as a tenant, then I just don't accept the partial payment at all.
1 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
11y
@Adam Johnson
Being able to do that will vary by judge and court.
For instance. We have our properties in Cleveland and the surrounding suburbs. We are mainly in two court systems for evictions the Cleveland court and the Parma court which handles the city of Parma and several other Cleveland suburbs.
In Parma court we have been able to bring uncashed money orders for partial payment, or sometimes full payment (If we file the eviction with our lawyer your out even if you attempt to pay in full later) and have been able to win the eviction and walk out of there with the money we were holding as damages.
This would NEVER fly in the Cleveland court. The money would need to be handed over to the tenant immediately and depending on which magistrate we have we get grilled with several questions on how clear we made it to the tenant that the rent was not accepted. If we get it early enough we mail it back.
1 Reply
Brie SchmidtBusiness Member
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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
11y
We already allow them to deposit cash into our account, but there is only 1 chase branch in the area where our properties were. We also have a PO box where they can mail money orders to. But a large portion did the family dollar payments and now that option is no longer available to us. I really liked the pay near me setup and am disappointed that we can't use it anymore.
FYI - for those of you with Chase, they do accept cash deposits for non-account holders if it is a business account
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Adam Johnson
Rental Property Investor · Holley, NY · Member since 2011 · 507 posts · 347 votes
11y
@Brie Schmidt - we have a mobile home park almost 3 hours from our office. We opened an account at a different bank that has several branches located around our property. They had multiple branches in several directions, so it worked well for the tenants that might need to stop on the way to/from work in a different town.
@James Wise - you are correct, it will definitely vary. Might even vary base on what side of the bed the judge got out on that morning!
3 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
11y
Originally posted by : @Adam Johnson
@James Wise - you are correct, it will definitely vary. Might even vary base on what side of the bed the judge got out on that morning!
Truer words have never been spoken. I once had a judge throw out a 3 day notice because of font size. My major problem with him doing this was it was the same 3 day notice that he accepted several times in the past.
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