Trouble with money oder for rent.

Trouble with money oder for rent.

Investor · Jefferson City, TN · Member since 2016 · 24 posts · 7 votes
Hi BP, I need a little guidance. I have my tenants mail their rent to a PO box. My rule is that as long as it is post marked by the 5th it isn't charged a late fee. I have a tenant who has lived in one of my units for 4 months now and has always been prompt on his payments. He pays via money orders (I assume he doesn't want or have a checking account). I have not yet received his rent for September. He said he mailed it on the 1st and has a receipt for the money order. Obviously if it got lost in the mail, that money is gone. My question is this: how do I handle the situation in a way that is fair, but also guides him toward a more responsible way of paying rent. I am trying to run a business, but I never want to put my profits above ethics. It would hurt for me to just eat the loss but I know it would be much more devastating for him to have to come up with another month's rent. Also, if it went as far as eviction, he can prove that he purchased the money order (which can then be made out to anyone) but I cannot prove that I didn't get and cash it. Sorry this is so long-winded. Thanks in advance for any wisdom you guys have to offer. -Peter
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Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
9y

For one, your requirement should be that you receive it by the due date, not that its postmarked.  That eliminates the ambiguity in this situation.  You didn't get it, its late, tenant pays late fees.  Your mortgage company, credit card companies, utilities and pretty much everyone except the IRS have long ago moved away from postmark dates.

Second, get away from mailing rent at all.  Sign up for one of the various electronic collection processes.  Some of these allow money to be "sent" at local stores.  Some, like "Chase quick pay" work with bank accounts.

If he really has the money order receipt, he can use that to find out what happened.  Hopefully, he gets his money returned.  In any case, you should not just eat the lost rent.  You didn't get your rent.  

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  • Gila Bend, AZ · Member since 2017 · 38 posts · 14 votes
    9y
    Originally posted by @Account Closed:

    @Jake Thompson That sound good as long as the landlord agrees to pay any extra fees the tenant is charged for paying through a 3rd party.

     My old apartment complex forced everyone to use an online payment system (with the fee paid for by tenant) or drop off Money Order at the office. Fees for the convenience (even tho it wasn't convenient.) 

  • JD MartinBusiness Member
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    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    9y
    Originally posted by @Charles Kennedy:

    @JD Martin Thanks for the explanation! I will look into Cozy. Would you mind going into more detail about your how your structure handling bank accounts to account for rent payments, CAPEX, maintenance, etc.?

    Do you allocate some certain amount from all your properties into a single account for CAPEX? Separate accounts for each property? Do you have a way that makes it easier for you to track expenses during tax season?

    What about security deposits? Do you simply deposit them in a savings account to accumulate some interest?

    Thanks in advance!

     Sure. One account to hold deposits. An account for tenant rent payment that gets transferred after payments are made. All business funds end up in the same account (other than the deposit account). All of our homes are rehabbed on the front end so there's minimal capital expenses. Minor repairs and maintenance get paid from this account. I don't have a big enough portfolio that I think it would make any sense to have separate accounts for everything. 

    I track expenses on an Excel spreadsheet, receipts for everything into the related house file. 

    Deposits are in an interest account (we get to keep the interest, but it's virtually zero since it has to be an insured account). 

    Skyline Properties
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  • Rental Property Investor · Philadelphia, PA · Member since 2015 · 213 posts · 160 votes
    9y

    @JD Martin

    Thanks for taking the time to explain it. That system makes sense. I recently opened a CIT high yield savings that gives 1.3%(and is FDIC insured), it's not a lot, but if you have $20k in security deposits, you could get $260 a year.. better than a few bucks.. I keep about 1/3 of my money here and the other 2/3 in the market.

    I would have more in the market, but am planning on purchasing a duplex to house hack around March of 2018, so I don't want to be over exposed since I will be out of the markets by then.

    Thanks again!

  • Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    9y
    Originally posted by @Philip Williams:

    Hey so I noticed some of you stating that a tenant does not have the ability to deposit in your bank account. While that is true with most of my banks CHASE BANK does still allow tenants to deposit into a business checking account. I have had tenants call me on the phone from chase saying they couldn't deposit. I explain to them to tell them it is a business account and i'm depositing rent, I have yet to have a deposit denied. Although once I had to call the branch myself and talk to the manager before they would allow it. I hope this helps some of you, it's possible this rule is not the same everywhere but I can't imagine a bank like chase would have different rules for different states. FYI I am in illinois if that helps hope this saves someone some trouble, with all the chase branches around it's pretty hard to make an excuse to not be able to find one!! @Peter Crabtree

    My business accounts are with Chase and was specifically told tenants could NOT make cash deposits.   IDK if they would have allowed them to deposit checks, but the last thing I want  is to deal with a tenant depositing a check and having it bounce and me deal with the fallout.

    As far as consistency, at one point I had an insurance claim on a property with a Chase HELOC. I had three different checks (cash value, replacement cost, supplement) that I had to get Chase to endorse. The procedure was different for all three checks. I'd swear they were just making things up as they went.

  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    9y
    Originally posted by @Account Closed:

    @Joe Splitrock Never heard of a money order cost 10 bucks. In my business, I eat a lot of fees because I don't think anyone should fleece anyone.

    You are right, my tenants probably pay around $3 for $1200 worth of money orders. That is similar to what some online rent services charge. It seems reasonable to me. I am sure you feel all your fees are reasonable too. Best not to judge other peoples business.

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