How do you collects rent?

General Landlording & Rental Properties
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How do you collects rent?

Jason Chambers
El Paso, TX · Member since 2016 · 71 posts · 22 votes

We recently bought a 5 unit property in an older historic area that is seeing some growth. We got a good deal and the rents have been kept artificially low which allows plenty room for more cash flow. Only problem is that the current tenants don't have bank accounts and generally pay by check or money order. That means we have to show up several times at the beginning of the month to collect.

What are you guys doing to avoid having to physically collect rent payments? A couple of the tenants in this particular building aren't very savvy with the internet either. 

Thanks!

Jason

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Account Closed
Retired Landlord/Author · Commerce Township, MI · Member since 2012 · 1k+ posts · 1k+ votes
10y

There is something called the MAIL.  It amazes me how much we, as landlords, try to "cater" to our tenants.  

When I rent my homes out, I do a credit check and I screen the applicants inside and out.  And I chose people who are 'COLLECTIBLE', but also 'RESPONSIBLE ADULTS'.  Therefore, this entails, them being capable of stopping off at a post office or a mail box at their line of work, or somewhere, and mail their rent.

If a Tenant expects me to knock on the door and collect their rent, they aren't anyone I want as a tenant.  My time is too valuable, and I'm too busy, much busier then they are!  

If they don't have the rent in my office on or before the first of the month, their rent is late, and I send them that Notice To Quit on the very first day rent is late.

Am I too tough?  Nope, I just expect people to pay their bills on time, and since I chose applicants who paid their bills on time, I hold them to the same standards as anyone else.

Nancy Neville

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  • Account Closed
    Retired Landlord/Author · Commerce Township, MI · Member since 2012 · 1k+ posts · 1k+ votes
    10y

    There is something called the MAIL.  It amazes me how much we, as landlords, try to "cater" to our tenants.  

    When I rent my homes out, I do a credit check and I screen the applicants inside and out.  And I chose people who are 'COLLECTIBLE', but also 'RESPONSIBLE ADULTS'.  Therefore, this entails, them being capable of stopping off at a post office or a mail box at their line of work, or somewhere, and mail their rent.

    If a Tenant expects me to knock on the door and collect their rent, they aren't anyone I want as a tenant.  My time is too valuable, and I'm too busy, much busier then they are!  

    If they don't have the rent in my office on or before the first of the month, their rent is late, and I send them that Notice To Quit on the very first day rent is late.

    Am I too tough?  Nope, I just expect people to pay their bills on time, and since I chose applicants who paid their bills on time, I hold them to the same standards as anyone else.

    Nancy Neville

    10Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    10y

    I only accept payment 2 ways: either electronically through one of a couple of services I use (Cozy & erentpayment.com), or the tenant can deposit the rent directly in a local bank business account I have set up for that purpose, and I give them deposit slips. I don't have a single tenant at this point using the latter, they are all paying electronically. No mail & bank trips for me, no "lost in the mail" checks. 

    BTW, the acceptable methods of payment are included as part of the lease they sign. This solves any after-the-fact arguments about how to get paid. 

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    4Reply
  • Nicole A.Pro Member
    Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
    10y

    It might be tough to find electronic pay options when the tenants don't have bank accounts, as Jason mentioned. Unless another option similar to PayNearMe is available, they'd have to either mail you money orders or deposit direct to your account. If they mail, you need to make clear you must RECEIVE payment by X date to not be late...no "it's in the mail games". And if they deposit, you need to ensure you can tell who deposited what so there's no confusion on who's paid.

    PayNearMe was an awesome option for cash people, but no longer is available for landlords that have less than 100 (I think?) units.

    1Reply
  • Michael BarbariPro Member
    Banker · Downers Grove, IL · Member since 2014 · 396 posts · 107 votes
    10y

    @Account Closed I like your style!

    0Reply
  • Sarah Fa
    Real Estate Investor · Memphis, TN · Member since 2016 · 4 posts · 1 vote
    10y

    I opened an additional business account just for collecting rent. I provide the tenant with deposits slips and bank hours addresses. They make a deposit at the bank. This way I can follow up easily.

    I keep only a minimum amount of $$ at this account to avoid complications of any kind. It works very well for about 6 years.

    If you are looking for a good investment we recommend Memphis TN.

    The city is developing and there are many new jobs coming every day.

    We are very happy with the investment. Great cash flow and high ROI. I would love to share my experience and help you do the same as we did.

    This is my first time using this posting, I just found out that they defined me as a whole seller which I AM NOT!! I am a RE investor in Memphis TN

    1Reply
  • Rick S.
    Fort Collins, CO · Member since 2014 · 397 posts · 161 votes
    10y

    Disclaimer: I work for a rent payment service

    Here is what I would recommend @Jason Chambers if you are looking for an electronic collection option:

    1. For the people without a bank account have them get a prepaid debit card that allows ACH debits, such as the NetSpend card that we recommend.  Not all prepaid cards allow ACH/eCheck debits so they would want to check on that first.  They can use the card like a bank account on payment services as NetSpend will provide them a routing and account number.

    2. You could then use an electronic payment service to collect the payments and if necessary look into a service that allows you to sign up the tenants using a form option, such as something they sign when they sign the lease.  

    We have a number of people in your situation using a similar method to make collection easier.  Please let me know if you have any questions.  Thanks.

    0Reply
  • Nancy Curran
    Real Estate Investor · Chicago, IL · Member since 2014 · 286 posts · 159 votes
    10y

    I actually have rent boxes at all my properties with a little lock on them. Not everyone uses them, but it's there if they want it. I live close to all my properties and this gives me a chance to walk through the properties once a month and make note on any irregularities. Everyone knows I come by on the sixth to pick up rent. So if they forgot to mail, or the bank made an error, they can always pop a check in the box. 

    0Reply
  • George P.
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    10y

    I use chase quickpay.  but they have to be somewhat phone or computer savvy.  chase has an app. 

    I. addition,  chase has deposit only atm cards.  2 tenants use them to deposit their rent in the atm. 

    the other 25 tenants pay with chase quickpay. 

    1Reply
  • Curtis YoderPro Member
    Rental Property Investor · Tulsa, OK · Member since 2014 · 241 posts · 187 votes
    10y

    I don't "collect" rents. In my lease it is clear that it is the tenants responsibility to pay their rent on time, or they owe a late fee. They are given choices; 1. Bring to my local office personally 2. Mail to my office (I am not responsible for the mail, has to be in my hands by the 5th or you get a late fee) 3. Deposit into an agreed upon bank account that I set up for deposits by tenants 4. I am now able to take electronic rent payments (tenants LOVE this.) 

    And I love my tenants and try to take great care of them! 

    0Reply
  • Tom Ott
    Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
    10y
    Originally posted by @Jason Chambers:

    We recently bought a 5 unit property in an older historic area that is seeing some growth. We got a good deal and the rents have been kept artificially low which allows plenty room for more cash flow. Only problem is that the current tenants don't have bank accounts and generally pay by check or money order. That means we have to show up several times at the beginning of the month to collect.

    What are you guys doing to avoid having to physically collect rent payments? A couple of the tenants in this particular building aren't very savvy with the internet either. 

    Thanks!

    Jason

    Hello Jason,

    There are many great online services to look into! I prefer Cozy or Appfolio. You should check them out. Of course they have different prices and features, but it is great to compare.

    2Reply
  • Nicole A.Pro Member
    Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
    10y

    @Tom Ott Does Cozy or Appfolio offer payment services for tenants with no bank account? 

    1Reply
  • Tom Ott
    Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
    10y
    Originally posted by @Nicole A.:

    @Tom Ott Does Cozy or Appfolio offer payment services for tenants with no bank account? 

    Hi Nicole,

    I am pretty sure Appfolio allows online credit card payments. I believe there is a service fee. Some tenants might be willing to pay the fee if that means not driving far to drop off a check in person.

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    10y

    @Jason Chambers most landlords (and tenants) will agree that online electronic payments are best, but they require a checking account. Some properties are more likely to attract a tenant type that has no money management skills. Those people use cash and will get cashiers check or money order to pay rent. They should mail it to you, but having managed properties like that, I often found myself picking up the money to ensure I got it. I know some landlords say to never pickup rent, but it was the only way I could guarantee getting paid. I moved on to better properties and better tenants and no longer have that issue.

    I am a little surprised that none of them have bank accounts. Many businesses require an account to deposit pay checks, but it depends on the type of work. 

    0Reply
  • Jason Chambers
    OP
    El Paso, TX · Member since 2016 · 71 posts · 22 votes
    10y

    Thanks to everyone for all the feedback! This is an awesome discussion. I'm in a peculiar situation where I inherited the tenants from the previous owner. He's old school and had no problem coming by every month to pick up rent. With my 9-5 job that isn't always possible because I travel quite a bit. I'm trying to get them away from that but again, most of them don't have regular banking habits that include online banking. Electronic payments would be preferred. I'd also rather stay away from the mail. Just don't want to deal with the hassle of waiting for checks or them getting "lost" in the mail. I think setting up a local bank account they can deposit into might be our best bet. 

    Since we took over we have everyone on a month to month lease except for one tenant. We've already had turnover in one unit and immediately found another that we were able to charge higher rent. Within the next six months we expect that most of the tenants will be moving on which will allow for a rehab of all the units and allow for us to charge market rents throughout and target a different type of tenant. I'm hoping this current rent collection headache will only be temporary.

    0Reply
  • Eddie T.
    Rental Property Investor · NY · Member since 2013 · 844 posts · 350 votes
    10y

    I use Chase quickpay also or my tenant go to the local chase branch and deposit it into my rent account at the teller.

    0Reply
  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    10y

    I do it old school-Snail mail.

    What I did do for my tenants is I gave them 11 addressed envelopes. Literally they just have to write a check, insert into envelope and drop it in the mail.

    1Reply
  • Manuel Gonzalez
    Lake Jackson, TX · Member since 2013 · 119 posts · 34 votes
    10y

    I'm a welder by trade so I built a 4 inch deposit  pole it's buried about 3 feet in the ground so they can't steal it they insert the money thru a hole in pipe and above ground level I made a section of pipe that comes out with a stain less steel  security  lock on back side  pretty much any box with lock would work  attached  to property just make  sure they don't put cash  or it might just disapear

    1Reply
  • Kayla W.
    Sherwood, OR · Member since 2016 · 23 posts · 25 votes
    10y

    @Nicole A. Edit to my last post: Cozy does offer tenants the option to pay by credit or debit card for tenants who don't have (or would rather not use) a checking account.

    0Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    10y

    My tenants provide me with post dated checks for the year, those that do not are responsible for getting their rent to me by the first or they are late. I prefer they mail me a money order. Getting it tome by mail is not my problem and not something I ever think about. If it arrives on the 2nd they owe me a late fee. If they are smart they mail it early if they are stupid they pay my late fee.

    Chasing tenant for rent is a mistake novice landlords generally make that they will regret. Training tenants is the key to a happy landlord.

    In your case the solution is switching out all your inherited tenants and screening to accommodate your personal landlord needs. 

    0Reply
  • Abraham Sosa
    Turlock Ca · Member since 2016 · 24 posts · 10 votes
    10y

    I usually go and collect it myself at the property. My properties are located in the lower income atea of the city, so I can't be too picky. Rents are due on the first and they have till the 5th to pay. If I don't receive rent by the 5th, they have to pay me $25 for each day late. Once it accumulates to $250 in late fees I serve the 3 day pay or quit. After Three days I send a 90 day eviction notice. Here in California it takes about 90 days to evict someone and if they have children and make the judge feel sorry for them in court, it can take up to 6 months to get someone out. So sometimes you just can't be too picky. 

    0Reply
  • Account Closed
    San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    10y
    Originally posted by @Jason Chambers:

    We recently bought a 5 unit property in an older historic area that is seeing some growth. We got a good deal and the rents have been kept artificially low which allows plenty room for more cash flow. Only problem is that the current tenants don't have bank accounts and generally pay by check or money order. That means we have to show up several times at the beginning of the month to collect.

    What are you guys doing to avoid having to physically collect rent payments? A couple of the tenants in this particular building aren't very savvy with the internet either. 

    Thanks!

    Jason

     Hi Jason,

    I'm going to guess that your property is in El Paso?  And your tenants are Mexican?  If so, I can give some insight into how things work in Mexico, as I actually moved there when I had my mid-life crisis LOL.

    In Mexico, everything is done with cash.  And what you do, is you go to the business where you want to pay your bill and you stand in line.  Forever.  Then, you pay with cash.

    So, if these tenants are from Mexico, they are familiar with the idea of having to go somewhere to pay their bills.  And they are very unfamiliar with paying in any way other than with cash.  But, being in the states, they do understand taking cash somewhere to have the money transferred somewhere else, like Mexico (via Western Union, etc.)

    So, I suggest you work with knowing what they understand.  Give them a place where they can go pay the rent, and when it has to be done.  If you have an office, etc., give them the address and when they must come and pay their bill.

    If they are comfortable with money orders, then I'll bet they are familiar with the local Walmart, which is where they can also send money to Mexico, from what I understand, with Walmart's money transfers.

    At Walmart, they can also take their cash and pay bills.  I think they can even do a direct deposit to your bank account.  So, you might want to look into the Walmart services, if there's one nearby.  And odds are, in El Paso, that the employees at Walmart will speak Spanish and can explain to your tenants what they need to do.

    1Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    10y

    Pay Near Me is a good one.  Online ACH via Appfolio or PropertyWare and mail.

    0Reply
  • Ryan Billingsley
    Investor/Realtor · Wentzville, MO · Member since 2014 · 846 posts · 431 votes
    10y

    I use cozy.co.  I have been using it for a couple months now.  It does take 5-7 business days to receive the payment once the tenant submits it online but other than that it works great.  My tenants like it better and so do I.

    0Reply
  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    10y
    Originally posted by @Manuel Gonzalez:

    I'm a welder by trade so I built a 4 inch deposit  pole it's buried about 3 feet in the ground so they can't steal it they insert the money thru a hole in pipe and above ground level I made a section of pipe that comes out with a stain less steel  security  lock on back side  pretty much any box with lock would work  attached  to property just make  sure they don't put cash  or it might just disapear

     This is the most unique way of collecting rents I've heard of. Nice.

    0Reply
  • Daniel D.
    Real Estate Investor · Fort Worth, TX · Member since 2014 · 29 posts · 20 votes
    10y
    My tenants use Chase QuickPay or mail. If it is not a full rent payment I can decline payment. I think anyone letting tenants deposit rents directly into the landlord's bank account should reconsider. If a tenant pays a partial month of rent the clock can start over on an eviction proceeding. I'm not aware of a case to prove it can happen, but it is technically possible in some jurisdictions for someone to be late paying rent, get notices and eviction proceedings ramped up, then pay a few dollars directly to the landlords account -which starts the whole process over again. Just my 2 cents (worth what you paid for it, no doubt)
    0Reply
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