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

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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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Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
11y
Originally posted by @Jinyu D.:

@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?
That will work, but it's a pain to open and close many accounts. Plus there are fees associated with this and a future scaling problem. Less than 10 is still a pain, but what will you do once you have 20 or 30?
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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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@Timothy Gleason and @Brandon Turner and @K. Marie P. and @Jassem A.
Here is what I found out -
http://www.rentpayment.com/ is just like PNM but they use Moneygram locations.
http://www.paylease.com is just like PNM but they use MyCheckFree locations.
Our energy company accepts cash payments at both these locations so our tenants are already going there. Once I apply to both of them and find out the processing fees I will let everyone know
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Brandon Schlichter
Real Estate Agent · Circleville, OH · Member since 2008 · 633 posts · 488 votes
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I would be fine with dropping it off at a office, however for me I have tenants in two different towns and it's a 30m drive between them (meaning 1hr round trip) which can kind of make it difficult for a tenant to do.
I'm still leaning towards sending monthly invoices showing them what the rent is, due date, ect so that what they pay/when they pay is put in front of them every single month. Additionally in my eyes it's quite hard to safeguard the drop box system from thieves. I'd much rather the cash go into walmart/FDIC insured bank's coffer for storage than mine.
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
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Originally posted by @Jon Q.:

Originally posted by @Jinyu D.:
@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?
That will work, but it's a pain to open and close many accounts. Plus there are fees associated with this and a future scaling problem. Less than 10 is still a pain, but what will you do once you have 20 or 30?
Jon pretty much answered this the same way I would have.
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Alisha Mingus
wholesaler/aspiring investor and flipper · Sweetwater, TN · Member since 2015 · 32 posts · 7 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?
Have you tried greendot? The prepaid credit cards. I know they used to sell just a reload card for like $5 and you could add it to any card anywhere but I'm not sure if they do it anymore. You could always have your tenants get a green dot card and either transfer funds to your account or run the card as a debit card on your end. Paypal would be another good option. Dollar stores, Walmart, a lot of gas stations can load money into a paypal account and you can collect it that way.
Sorry if those suggestions were already mentioned and I missed them. Good luck
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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Brie Schmidt:

@Timothy Gleason and @Brandon Turner and @K. Marie P. and @Jassem A.
Here is what I found out -
http://www.rentpayment.com/ is just like PNM but they use Moneygram locations.
http://www.paylease.com is just like PNM but they use MyCheckFree locations.
Our energy company accepts cash payments at both these locations so our tenants are already going there. Once I apply to both of them and find out the processing fees I will let everyone know
Looking forward to hearing what you find out. How many locations are within easy access for your tenants?
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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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Originally posted by @Account Closed:

The Moneygram one has 11 locations in our zip code and the CheckFreePay one has 6 locations. Much better than the 1 Chase and 3 Family Dollar's we have. And since the utility company uses them they are probably going there anyway.
I appreciate the advice, I would have never thought of looking into how they pay their utilities....now if I can just find a PM software that has a spanish tenant portal I would be set!
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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
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Originally posted by @Brie Schmidt:

Originally posted by @Account Closed:
The Moneygram one has 11 locations in our zip code and the CheckFreePay one has 6 locations. Much better than the 1 Chase and 3 Family Dollar's we have. And since the utility company uses them they are probably going there anyway.
I appreciate the advice, I would have never thought of looking into how they pay their utilities....now if I can just find a PM software that has a spanish tenant portal I would be set!
I learned quite bit too. I just checked some of my markets. One 40K town has 10 locations all within 2 miles of each other, a 15K town with 3 downtown locations, and even the smallest 1K village where closest gas is 35 miles away has a money gram location at their one all purpose store. Makes so much sense that Moneygram would evolve to accept cash rent payments.
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Che Chiu Wong
Jersey City, NJ · Member since 2015 · 280 posts · 98 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?
Might be little bit unconventional. I tell my tenants to deposit directly to the bank (where my designated account resides), and all of them are okay with it. The main benefit is no drama (e.g mail lost etc.).
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Jacqueline Carrington
Investor · Corona, CA · Member since 2014 · 746 posts · 372 votes
11y
I used manage a 100-unit apartment building and our residents could pay online with card or bank account using www.PayLease.com. Not sure of the pricing as it was set up through our management company, but it may be a viable option even for smaller investors.
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Chris Martin
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
11y
An FYI... Chase does have The ATM Business Deposit Card despite BP topics to the contrary. Other banks do to (e.g. Wells Fargo) at low or no cost. Just a thought. We don't give out bank account information to tenants. For those that do, just make sure that you are not in violation of your 'terms of service' with your bank. It's not necessarily your tenant that can be an issue... a year from now that tenant you evicted and give your bank information to their boyfriend to pay for online merchandise, shipped to a vacant house, etc.
https://www.chase.com/commercial-bank/treasury-management/cash-flow

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Dawn Anastasi many tenants CAN"T get a checking account ergo they always pay in cash or money order. That was a hard one for the Aussie investor to understand were there banking system is all electronic they don't have checks LOL....
But when you explain to them that in the predominately rental areas of the US many tenants just can't get an account.. they bounced to many checks are are in the nationwide data base and will never get one again.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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@Chris Martin the other issue with giving out your bank account information is like in our state the professional tenant who is going through eviction shows up to court with a receipt showing that he put 100 in your account.. and that act alone stops the eviction process and you must start all over... as you are deemed to have accpeted a partial payment..
Giving out bank numbers is DANGEROUS these days with the amount of fraud and hackers etc.
I would routinely send my wire instructions to title companies for payoffs via a scan and e mail... I was closing a deal in Dallas yesterday and the title company called me and I had to verify my wire instructions verbally to them.. It appears hackers are intercepting e mails changing the wire instructions to their accounts and then sending to title companies and your funds end up getting wired to some crook.... complicated but simple .. Ergo is you do much business these days with nationwide title companies you are probably seeing encrypted e mails be sent to you.. ( use to hate them as I don't like the extra steps to open them) but now I fully understand and embrace it.. And In fact will be setting up my e mails from my office to go out encrypted as well when there is any bank account info on it.
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Nate T.Pro Member
Investor · Tempe, AZ · Member since 2014 · 142 posts · 73 votes
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Originally posted by @Jon Q.:

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!
It helps when you're presenting your case to the judge. If you specifically told the tenant that you weren't accepting partial payments and you weren't accepting payments by deposit, but they did it anyway, then the judge is more likely to rule in your favor.
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Nate T.Pro Member
Investor · Tempe, AZ · Member since 2014 · 142 posts · 73 votes
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Originally posted by @Brie Schmidt:

Originally posted by @Account Closed:
The Moneygram one has 11 locations in our zip code and the CheckFreePay one has 6 locations. Much better than the 1 Chase and 3 Family Dollar's we have. And since the utility company uses them they are probably going there anyway.
I appreciate the advice, I would have never thought of looking into how they pay their utilities....now if I can just find a PM software that has a spanish tenant portal I would be set!
With the MoneyGram and similar options, does the 7-11 or whoever is receiving the money, do they deposit the money into your bank account? Or do you have to stop by and collect it?
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Gavin WelchPro Member
Real Estate Broker · Lakeland, FL · Member since 2011 · 305 posts · 181 votes
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Renterup.com allows tenants to pay online.. And the cash crowd can pay at several large pharmacies and check cashing places.
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Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
11y
Originally posted by @Nate T.:

Originally posted by @Jon Q.:
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!
It helps when you're presenting your case to the judge. If you specifically told the tenant that you weren't accepting partial payments and you weren't accepting payments by deposit, but they did it anyway, then the judge is more likely to rule in your favor.
Better to tell the judge that I do t accept partial payment of rent and the rent wasn't paid.
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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
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Originally posted by @Nate T.:

Originally posted by @Brie Schmidt:
Originally posted by @Account Closed:

The Moneygram one has 11 locations in our zip code and the CheckFreePay one has 6 locations. Much better than the 1 Chase and 3 Family Dollar's we have. And since the utility company uses them they are probably going there anyway.
I appreciate the advice, I would have never thought of looking into how they pay their utilities....now if I can just find a PM software that has a spanish tenant portal I would be set!
With the MoneyGram and similar options, does the 7-11 or whoever is receiving the money, do they deposit the money into your bank account? Or do you have to stop by and collect it?
Moneygram has payee accounts that deposit accepted funds into your bank. Their website has a good description of the services and time frames for availability of funds.
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Roy N.Pro Member
Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
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Originally posted by @Account Closed:

Do Moneygram and the other 3rd-party payment services prevent tenants from making partial payments?
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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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Originally posted by @Nate T.:

With the MoneyGram and similar options, does the 7-11 or whoever is receiving the money, do they deposit the money into your bank account? Or do you have to stop by and collect it?
Pay near me did a direct deposit into my checking account after 3 days. I am still checking into the money gram and my check free ones
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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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Originally posted by @Roy N.:

Do Moneygram and the other 3rd-party payment services prevent tenants from making partial payments?
With pay near me I could set an amount and reject any payment other than that.
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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
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Originally posted by @Roy N.:
Originally posted by @Account Closed:

Do Moneygram and the other 3rd-party payment services prevent tenants from making partial payments?
Moneygram and it's rent payment program is just a payment portal. As far as I can tell it doesn't manage or document anything other than the payment amount. If the tenant/payor has a current working payee number they would be able to make a payment, I presume for any amount. I think the partial payment concern is getting blown way out proportion. Sure, some courts give landlords a harder time over others on this. IMO non-acceptance of partials can be spelled out in a lease agreement and can be returned to the tenant per that agreement. So the tenant shows up in court with a receipt of a partial payment made via a portal. You show up with a copy of your lease, your letter of non acceptance and return of payment. Not using a cost effective system that works for tenants in order to avoid partials seems extreme. This is coming from someone who has been worked over by professional tenant scammers in court.
I'm curious to know what Brie learns about the costs and the ease of receiving rents in this way.
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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
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Originally posted by @Brie Schmidt:

Originally posted by @Roy N.:
Do Moneygram and the other 3rd-party payment services prevent tenants from making partial payments?
With pay near me I could set an amount and reject any payment other than that.
This is interesting. So now we need to wait and find out if Moneygram's rent payment system will allow you to do the same thing.
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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
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CNN reported a few years back that 10M US households don't have bank accounts. Even if only a portion of those are renters, that's a lot of tenants that need options. Most of the phone apps and online services are connected to bank accounts. There is obviously a need for cash payment systems for rents. I've accepted cash rents via drop-offs and PM pickups, but haven't yet dealt with accepting payments via the Moneygram type portals. Great thread @Brie Schmidt.
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Roy N.Pro Member
Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
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That's interesting. Here the banks are suppose to provide citizens with access to a bank account, as a condition of their charter.
That said, with the amount of "fees" most banks levy these days and the staggering level of their minimum balances to avoid monthly account fees (often 5K+), quite a few people are deterred from using the banks.
I tend to agree that the partial payment bit is overblown here on the site. In our home jurisdiction the legislation is clear that arrears (rent and other amounts past due) must be paid in full to rescind a Notice to Vacate or and eviction order.
In other places, were the legislation is less clear, we articulate in our lease how payments are applied and that all current and past due amounts must be paid in-full before we will consider rescinding a Notice to Vacate or halting the eviction process.
We have yet to operate in a jurisdiction where the legislation states that a partial payment of arrears halts or quenches an eviction.
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