How to collect rent money

Question

I am just starting in the Real Estate Rental investment. I need to know how is more efficient to collect rent knocking doors or sending a bill to tenants? I am investing in a low income town and a friend of mine told me that for this type of tenant sending a bill it does not work. But Knocking doors and walking with cash is dangerous . What's your thoughts?

Thanks

Michael Seeker · Answer

I'm also in the same boat as Sara N., however when I first started out I had a tenant that I would "drop by" to pick up rent each month mainly because I had converted my personal residence to a rental and wanted to keep an eye on it.

I've gone through a wide range of ways to collect rent, and I have to say going to a property to personally collect has got to be the worst way to do it.  I also have never "billed" a tenant...if they don't pay rent on time on their own then I text/email/call them and let them know I haven't received it and what their options are (reduced late fee, full late fee, eviction filing, etc.).

Being a landlord is hard enough, no sense in causing yourself unnecessary stress by having to drive around collecting rent EVERY month.  Also I will guarantee that if you do this you won't just make 1 trip.  The first trip might be one excuse, the second might be another...pretty soon it's the 15th and you've driven back and forth 5 times for nothing.

Michele Fischer · Answer

We still find ourselves knocking on doors at times, but having the tenants bring rent to us or mail us a money order works pretty good.  Personally, i would rather travel to get the rent sooner and to get a chance to look in on the property and see how things are going.

Rick S. · Answer

@Miguel Vasquez I work for a rent payment service and one option we recommend for tenants without a bank account is a prepaid debit card that allow ACH debits, such as the NetSpend card.  They sign up for the card online and enter the card's routing number and account number like a bank account if you were to set them up with an online payment option.  Let me know if you have any questions.

Ed W. · Answer

I have and have had many, many rentals in low income areas.  I have NEVER collected rents.  Some of the rents have been as low as $350.  Many  of the tenants don't have good life skills or much in the way of education but if they want a roof over their heads they can - and do - figure it out.

I give prospective tenant a brief overview of expectations prior to them filling out an app and have a cordial heart to heart covering those expectations - both verbally and in written form - again with tenants prior to them signing the lease.  After that, it's on them to figure out how to get it to the office (or in a bank account or via the internet) on time.  I'll help them figure out the mechanism that will work best for them but the monthly on-time part is up to them.  No bills, no calls, no emails, no knocking on doors.   If I take over a property that already has tenants I have a cordial conversation and help them make the transition if the previous owner collected rents.  I may give them pre-addressed envelopes for the first 6 or 12 months or help them figure out how to do it online.

Your time is much better spent looking for good deals or spending your time with family and friends.

If they can't get their act together, we will part ways.  The only exception to that might be if the market really soured and vacancy rates were very high making it difficult to find good tenants.  In that case, I might have to come up with some Plan "B".

Jassem A. · Answer

It may not work depending on the tenant.  They may not have a bank account or transportation.  Find out how or where they pay their other bills and see if it's possible to have rent included.  If there are any banks within walking distance you could open an account and ask them to deposit the rent into your account.  Some Walmarts have banks inside them that are open 7 days a week and have a 24 hour dropbox.

Sara N. · Answer

gosh tough situation. sorry  I don't have any experience w/that as our tenants are more young professional and all pay online via this excellent site (venmo --free bank to bank, and the $$ arrives the next business day).