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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Adam Johnson
Rental Property Investor · Holley, NY · Member since 2011 · 507 posts · 347 votes
11y
I haven't had that problem...yet. I have had to stand there in front of the judge and so yes sir or no ma'am a few times that I thought I was right and the judge was wrong. I learned a long time ago that sometimes you just need to bite your tongue. Generally, I do well in eviction court. I have taken it on the chin a few times when the judge gives the tenant 3 weeks to "find somewhere to go". Those kill me because I know in 3 weeks I will need the Sheriff there to throw them out on the street because they won't find somewhere to go, but I bite my tongue because I work with the same judges every time. I once had a new server serve notice a day too early and managed to get it to go through the court because I stood there and took my scolding and didn't say a peep about it. It is kind of like building up and saving favors when you go along with the judge even though they don't say what you want to hear. I have watched other landlords get lippy and get shredded because they didn't dot all of their "i"s on the paperwork. "yes sir, I could have done that better and I will make sure not to do it like that again", then be quiet! Has saved me a couple times!
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Imran Khan
Real Estate Agent / Investor · Lawrenceville, GA · Member since 2015 · 8 posts · 1 vote
11y
Venmo. Its free. Easy to setup. Offer to set it up on their phone. If they are reluctant, offer a discount on the rent. Usually they comply when there's incentive.
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Jeff Blanchard
App Designer · Chicago, IL · Member since 2013 · 124 posts · 31 votes
11y
+1 Venmo - really easy and I've had few tenants that don't want to use it. They have the option of doing a deposit at a local bank branch then.
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Timothy Murphy III
Real Estate Broker · Cleveland, OH · Member since 2012 · 771 posts · 252 votes
11y
@Adam Johnson
@James Wise
In Parma, Ohio Muni Court I've had a defendant attempt to argue that rent was paid in full because it was eventually paid (late) via multiple money orders and a claim for a $50 rent credit based on an (unproduced) receipt for a faucet repair. The Magistrate lectured us about how accepting money orders via a drop box was risky because it could be deemed acceptance of a partial payment. That said, he still found the tenant to be in arrears and granted judgment for the plaintiff.
I've even lost in Cleveland Municipal Court over font size in the 3 day notice without a tenant present to raise any defenses. Apparently certain language wasn't conspicuous enough as required because of large heading font at the top of the notice. And this same Court / Magistrate had accepted the same notice several other times in the past. We now occasionally use one with the conspicuous language printed in a comically large font.
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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
I have a buyer with 35 plus doors and many of his tenants pay in cash or need/want to hand deliver rents. He has a family member that owns a large apt, complex and he arranged to have the on-site PM there accept his tenants' rents and issue receipts for a small fee. Obviously there's a safe on site and the area is safe enough for this activity. Interestingly, his tenants are driving cross town when they want to hand deliver rent.
You may want to consider checking with some of the local check cashing and private mail box storefronts (they are often utility company pay locations too) and see if you can cut a deal with them. I'm guessing this pool of tenants pays for lots of things with cash and it's just a matter of finding a centrally located, easily accessible and safe collection site.
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Mary B.
Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
11y
Originally posted by @Brie Schmidt:

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?
Square Cash app, Wells Fargo and a few other banks have apps that the PM can use. Its a maximum of 48hrs for the transfer to be complete(for Square Cash) but it can be sooner.
They all are Android and Apple friendly as well as user friendly. Free apps, no service charge up to a particular $$ amount. Also good on security with not disclosing account info .
Kudos,
Mary
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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Mary B.:

Originally posted by @Brie Schmidt:

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?
Square Cash app, Wells Fargo and a few other banks have apps that the PM can use. Its a maximum of 48hrs for the transfer to be complete(for Square Cash) but it can be sooner.
They all are Android and Apple friendly as well as user friendly. Free apps, no service charge up to a particular $$ amount.
Kudos,
Mary
Does Square have products that will work for tenants without bank accounts? A lot of cash paying tenants have no bank accounts.
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Mary B.
Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
11y
Originally posted by @Account Closed:

Originally posted by @Brie Schmidt:

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?
Square Cash app, Wells Fargo and a few other banks have apps that the PM can use. Its a maximum of 48hrs for the transfer to be complete(for Square Cash) but it can be sooner.
They all are Android and Apple friendly as well as user friendly. Free apps, no service charge up to a particular $$ amount.
Kudos,
Mary
Does Square have products that will work for tenants without bank accounts? A lot of cash paying tenants have no bank accounts.
I'm not sure if they do, since most people have some sort of savings or checking account. They have to verify where the money is coming from and going, which is part of the set-up process. They may allow the use of credit card accounts (with cash advances) in lieu of bank accounts.
My mistake, there is no service charge for personal accounts up to a particular amount and a small fee for business accounts. https://squareup.com/help/us/en/article/5187-about...
Kudos,
Mary
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Jassem A.
Investor · PA · Member since 2013 · 1k+ posts · 602 votes
11y
@Brie Schmidt
All of the Walmarts around me have banks inside of them with flexible hours (Woodforest). Open an account there and request that the tenant writes down their name and address on the deposit slip. It costs $200 to open a savings account with no fees.
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Roy N.Pro Member
Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
11y
@Brie Schmidt
Do you have the option of issuing a deposit-only bank card to each tenant? This should enable them to deposit their rent at the nearest ABM.
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Brie SchmidtBusiness Member
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OP
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
11y
Yea, most of the tenants don't have bank account, so they mobile apps wont work for us
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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Brie Schmidt:

Yea, most of the tenants don't have bank account, so they mobile apps wont work for us
That's what I suspected. I think it's hard for landlords who have never dealt with such a tenant pool to imagine. This group manages with cash or money orders for everything. Where are your tenants paying their utility bills?
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Brie SchmidtBusiness Member
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OP
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
11y
Originally posted by @Account Closed:

Originally posted by @Brie Schmidt:
Yea, most of the tenants don't have bank account, so they mobile apps wont work for us
That's what I suspected. I think it's hard for landlords who have never dealt with such a tenant pool to imagine. This group manages with cash or money orders for everything. Where are your tenants paying their utility bills?
That is a really great idea! I looked up payment locations on the energy provider site and there are a bunch in our area. Most are independant stores, any advice on how to contact them to see if we can have this service added?
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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
In my areas, the utility company payment acceptance locations are often storefronts that are liquor stores and small grocery/convenience stores. These locations usually have Western Union, check cashing, sell lottery tickets and prepaid phones.....multiple services for low income and/or cash only people. I'd have your PM visit a couple and see what they can do. It's definitely going to be a custom arrangement. And I'm guessing you'll have to negotiate hard to get a good deal. What's the cost of accepting payments via paynearme?
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Brie SchmidtBusiness Member
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OP
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
11y
Originally posted by @Account Closed:

In my areas, the utility company payment acceptance locations are often storefronts that are liquor stores and small grocery/convenience stores. These locations usually have Western Union, check cashing, sell lottery tickets and prepaid phones.....multiple services for low income and/or cash only people. I'd have your PM visit a couple and see what they can do. It's definitely going to be a custom arrangement. And I'm guessing you'll have to negotiate hard to get a good deal. What's the cost of accepting payments via paynearme?
Paynearme was $3.99 a transaction. I just found out the moneygram is the provider for most of the location, so I am going to see what it takes to get an account with them
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Jassem A.
Investor · PA · Member since 2013 · 1k+ posts · 602 votes
11y
@Brie Schmidt
It looks like Farm Fresh and Walmart have a Bill payment service for the power company near me
http://www.walmart.com/cp/Bill-Payment/632045
It works through checkfreepay or moneygram
https://www.reddit.com/r/RealEstate/comments/3gaks...
Curious what this service costs which uses checkfreepay and combines the utility bills into one bill:
https://www.paylease.com/corp/managers/online-paym...
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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Brie Schmidt:

Originally posted by @Account Closed:
In my areas, the utility company payment acceptance locations are often storefronts that are liquor stores and small grocery/convenience stores. These locations usually have Western Union, check cashing, sell lottery tickets and prepaid phones.....multiple services for low income and/or cash only people. I'd have your PM visit a couple and see what they can do. It's definitely going to be a custom arrangement. And I'm guessing you'll have to negotiate hard to get a good deal. What's the cost of accepting payments via paynearme?
Paynearme was $3.99 a transaction. I just found out the moneygram is the provider for most of the location, so I am going to see what it takes to get an account with them
I did not know that Moneygram was the common denominator at these type of storefronts. Please let us know what you find out.
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Brie SchmidtBusiness Member
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OP
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
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I will - I am on the phone with them now!
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Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
11y
Originally posted by @J Scott:

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...
I disagree. There are various reasons not to have your tenant know your checking account numbers, most importantly to be able to refuse partial payment of rent.
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Jassem A.
Investor · PA · Member since 2013 · 1k+ posts · 602 votes
11y
I think the problem with moneygram is that you still have to go to a moneygram location to pick up the rent in cash
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Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
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If you use a national bank or maybe even regional, I suggest requesting "deposit only" cards, so tenants can only deposit and will never know your account number. You can also shut off any card at anytime. If your tenants are tech savvy, I suggest getting Buildium for rent payments. Both of these require that you have an LLC setup.
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Brie SchmidtBusiness Member
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OP
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
11y
Originally posted by @Jassem A.:

@Brie Schmidt
The Walmart option is not good for us as they don't have locations close to us.
https://www.paylease.com/corp/managers/online-paym...
This might be a great option - it looks like they tapped into the current infrastructure with mycheckfree locations. I requested more information
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Jassem A.
Investor · PA · Member since 2013 · 1k+ posts · 602 votes
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On the pay or quit notice you can add wording in it that rescinds their right to pay via deposit
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Jinyu D.
Investor · Charlotte, NC · Member since 2015 · 22 posts · 2 votes
11y
@James Wise @Adam Johnson I'm also thinking of setting up the direct deposit and my thought for partial payment is if I set up a different accout for each different address, I can freeze or cancel the bank account anytime if I decide to start eviction process. This is a scenario when I manage under 10 units of course. Do you think that will work?
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Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
11y
Originally posted by @Jassem A.:

On the pay or quit notice you can add wording in it that rescinds their right to pay via deposit
That doesn't help. They are already in breach of contract, so what's to stop them from depositing partial rent? Nothing!
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