Real Estate Investor · San Jose, CA · Member since 2017 · 56 posts · 10 votes
One of my tenant inform me that she is switch banking, as a result, she need set up new ACH to pay the rent. The process include she initiated a try deposit into my bank account which it went through. After I told her i saw a small amount deposit into my account. She asked what was the amount as it need for her to set up the link so she can pay me monthly automatically in the future. I just not very comfortable to give out as I am worrying this kind link may enable her to pull money from my account. Am I worrying too much? None other tenants asked that step. She has been rent the house for 4 years now.
Investor · Fort Collins, CO · Member since 2017 · 169 posts · 119 votes
9y
Typically these are called micro-deposits and they are used to verify that the ACH payments is being set up to the correct account. They are probably asking for this info because the tenant is trying to set up recurring ACH payments. I would not be alarmed by this, most banks will require this as proof that the accounts are set up correctly. Call for sure to verify, but I would not raise the red flag for sure just yet.
Rental Property Investor · Mount Prospect, IL · Member since 2017 · 46 posts · 12 votes
9y
This method is used by one of my banks to ensure the account is mine to authorize WITHDRAWALS. I would not disclose the small amounts to her if I were you.
Investor / Real Estate Agent · Oklahoma City, OK · Member since 2015 · 324 posts · 157 votes
9y
@Joe Xie one of my friends has his direct deposits set up like this... The renter has the rent direct deposited to a "ghost" account then a day later that money is transferred to his actual bank account. That way the renter never knows his account information. I have been thinking about setting my properties up like this, haven't checked with my bank on the actual details.
Real Estate Investor · San Jose, CA · Member since 2017 · 56 posts · 10 votes
9y
John D. Shelly Doris Mark Gallagher Mark I. Dylan B. Thanks guys! I will check each way out.
As we are on the topic, anyone knows what could be the problem if I let her know the deposit amount?
Investor · Fort Collins, CO · Member since 2017 · 169 posts · 119 votes
9y
Typically these are called micro-deposits and they are used to verify that the ACH payments is being set up to the correct account. They are probably asking for this info because the tenant is trying to set up recurring ACH payments. I would not be alarmed by this, most banks will require this as proof that the accounts are set up correctly. Call for sure to verify, but I would not raise the red flag for sure just yet.
Real Estate Investor · San Jose, CA · Member since 2017 · 56 posts · 10 votes
9y
Paul Ronto thanks.
I just take a look my account (account A) which is linked to my another account (account B) through these micro deposits verification in a different bank. I can not only transfer fund to that account ( from Account A to account B), I can also require a fund from that bank (account B) to transfer to my account A. Scary.
Rental Property Investor · Mount Prospect, IL · Member since 2017 · 46 posts · 12 votes
9y
You're welcome. As @Paul Ronto indicated these micro deposits are in fact used for ach transfers but for two-way. You can one-way ach transfer into any account but to prevent fraud (and potential liability) many companies require you to verify the micro deposit amounts before they will withdraw money from an external account. The reality is you can withdraw from an account without having to verify it, utility companies use this method all the time, you just need to sign an ach authorization.
Accountant · Greensboro, NC · Member since 2016 · 16 posts · 6 votes
9y
If this is your only tenant requesting ACH deposits, then I agree with the post above instructing her to use bill pay at her bank. It will feel the same to the tenant and protect your account. We only allow large corporate entities to deposit directly into our bank accounts.
Investor · Cathedral City, CA · Member since 2014 · 481 posts · 170 votes
9y
Micro deposits are only used for the sending account. The receiving account does not need to go through with this step. In the past Payroll companies were doing this with your direct deposit paycheck. This gives them the right to deduct from your account as well.
Real Estate Investor · San Jose, CA · Member since 2017 · 56 posts · 10 votes
9y
James H. I have other tenants do direct deposit, but they never ask me to go through the process. I have used an email to pay one of HOA through Chase and no need do micro deposit.
Rental Property Investor · Evansville, IN · Member since 2016 · 27 posts · 11 votes
9y
@Joe Xie Your bank should be able to put an ACH 'out' block on your account to avoid your tenant from pulling money out of the account. If you have other regular transactions such as loan payments, etc. you can set up exemptions to allow those to go through.
That doesn't sound normal. It's best to use an intermediary service for this so no one ever has your bank account information.
Mark, when you hand a check to someone to pay a bill, did you give them your bank account details? Look on the bottom of your checks.
Yes Jeff, I understand that account numbers and routing info are on the bottom of checks. However, 1) I write very few checks and when I do they go to reputable receivers (municipalities, etc.) and 2) I don't write checks to my tenants.