Disclosure: I am the Founder/CEO of Cozy.
This was a tough day for many landlords, and we understand your fears, concerns, and frustrations. Thank you for asking about our methods. Let me share why we believe landlords and renters using Cozy will not experience a similar result to the recent event.
First, and perhaps most importantly, we work with Stripe for payment processing. Stripe operates in 25 countries, and they’re a company clearly set up for the long term. Stripe is a $9 Billion company and is widely regarded as a trusted payment processor. Stripe handles payments for tons of awesome companies, including, coincidentally, BiggerPockets.
While we have many internal safeguards that I’ll talk about in a second, understand that Cozy never takes custody of your funds during a payment transaction. Our processing partner Stripe is a licensed money transmitter, and moves your money on our behalf. Funds travel from renters’ bank accounts and credit cards and are deposited in landlords’ bank accounts via the ACH system. Cozy has no access to your money while it’s in transit.
eRentPayment in a recent statement said the following:
“We regret to inform you that our payment processor, eCheckit, has informed us that it expects to file for bankruptcy protection shortly. We are told that it suffered losses due to a fraud and that its processor, Check Commerce, has held over $4 million of its funds and will not release the funds to the intended recipients at this time.”
We believe it to be extremely unlikely that Stripe will experience an issue like this. Their underpinnings sit on Wells Fargo, which is the fourth largest bank in the United States.
Of course, this is not the only issue that may affect your security when processing rent payments, so we have additional buffers in place to add additional security:
1) Our Trust & Safety team ensures that every single Cozy payment goes through several layers of fraud detection. These include internal proprietary software, external partners such as Sift Science, and humans at Cozy.
2) We employ an extremely rigorous software development process. Every code change is backed with automated tests and reviewed by at least two engineers. Cozy has to work reliably. We understand how costly bugs can be, like when Knight Capital lost $441 million in 45 minutes.
3) We keep our infrastructure up to date, which ensures that we receive security updates as soon as possible. The recent Equifax breach was a result of a security update that took months to apply. Similar updates to Cozy’s environment are applied in days, or even the same day, for critical vulnerabilities.
4) We actively and voluntarily pursue data security. Cozy is voluntarily compliant with PCI DSS, even though we do not store your credit card information. (It’s in Stripe, so why also store it on Cozy?) PCI DSS is one of the most stringent organizational security standards in financial technology. We hire third-party security specialists to perform yearly audits. For example, the leak of credit card information at Home Depot in 2014 was due to insufficient PCI DSS compliance.
I am surprised to see a couple of folks still using paper checks. Tenants have told me that it got "lost in the mail" and their account information is written on the check.
PayNearMe for unbanked tenants works well. Then, Hemlane for online transfers. After reading this thread, I checked with their team (have come to know them well since using them) and they also use Stripe - safe and secure.
Like @Llewelyn A. ,we use Rentalutions since they do more than process payments, but don't force you to use all of their services.
Our tenants use Zelle, our bank account is with Wells Fargo. We usually get payments the same day or within 3 business days. The limits with Wells Fargo are $2000 any single payment from an individual but there is a limit of 20,000 a month. So if your rental income is less than $20,000 then it would work. Since we are OOS landlords, and our tenants are college students renting by the room, it works for us! I return security deposits using the same method as well. Zelle another electronic payment systems like POP Money, P2P is available through nearly all national banks and many smaller banks. When we get a new tenant in, we send them the information on how to set it up through their bank. The other option for them is to deposit directly into our business account at Wells Fargo. We have used this method for over 3 years now, and have had no issues with it. Also each deposit list the persons name so we know who its coming from, and we also receive a payment notification from the bank as well.
@Rachel N. we are going with ZELLE. its free. there is no middle man. and for us today is was instant deposit.
JUST AN UPDATE OF OUR SITUATION:
all 8 of our tenant filed R10 claims at the bank. (if you want to know more about what this, how to do it, etc ... join the facebook group "erentpayment discussion group" and search the threads for R10 or my husbands name Rudo Catlin) ...
3 of our tenants successfully got their money back today and have resubmitted the rent payments to us using zelle. and surprisingly enough the payment was deposited into out account SAME DAY with zelle. (ZELLE FOR THE WIN!!!) the 3 tenants banked with citizen, pnc, pescu and our bank is capital one so this makes the almost instant deposit amazing. we will be using them moving forward as to avoid the risk of a middle man, however we might consider cozy if only for all the property management features. im still scared of the middle man.
all 3 tenants were originally listed at processing (but not deposited) in erentpayment.
we only received erentpayment notification for one of these tenants returns. so you have to have trust worthy tenants who will tell you when they get their money back.
we can no longer appear to have access to our erentpayment account. when we try to log in we get the following error:
Error
Your previous operation did not complete and has been logged. Please return to the previous screen or contact us
To take a step back - why does everyone feel the need to let renters pay via electronic payment? Isn't that the tail wagging the dog???
I understand there is some convenience to have electronic payments but the moment I can't mobile deposit at my bank or the moment I feel it is too much of a hassle to deposit a check is the moment I know I don't have time for real estate! Plus - I can't imagine everyone is willing to "come to the times" and setup an electronic account so I will still have to deal with paper checks as it is.
Am I missing something here???
Right on. It isn't like no one ever gets hacked like, oh say Equifax, Yahoo, IRS, SEC, Instagram, Deloitte, Kaspersky, Verizon, Discus, T-Mobile, and on and on. All have been hacked.
The point is, the more digitial portals people use, the more likely they are to be hacked and that automatic deposit won't find its rightful owner - you. It will be hacked. It is just a matter of time. With a check payment (I always make a copy of each rental payment) I have proof to the bank that even though they might not show the payment, I have something to show, that they owe me money. With an auto-payment it's "he said-she said". A check can be canceled and a new one issued. Plus, I know that the check arrived -or- didn't. In a different thread, someone said they were owed 12 payments (electronic deposits) that they didn't realize were Not made. Turned out they could only collect on the last few because it had been too long on some of them. Sounds like an expensive way to do business to me.
Right now, even though our tenants are on epayment, one of them had trouble paying the July rent, gave us three blank checks for it. We got his epayments for August, Sept and Oct. But he made 2 part payments for July with the checks he gave us, and he tells us that he should be able to pay the last 3rd by next Monday, but call him first.
We're thinking about it, if we didn't have this guy on epayments, every month would be like July. We don't require that of everyone, and I got the feeling when I took him on that this might happen. He drives a cab, and says things are slow certain times of the year. We're on ClearNow and the tenant gets an email several days ahead to tell them the money will be taken out on the first. We're not going through the eviction route now as my wife is still recovering, though she can drive.
Your tenants have you trained well. They are the ones in control. You've forgotten that it is your property and they must play by the rules or leave.
I find epayments to be a good training tool, for tenants.
These days, in high rent areas, tenants often are borderline when it comes to income qualifications. So if I see someone with a good credit report, but rent at or about 3x income, I'll tell them, you're borderline but I like you, however I'll rent you the place if you go on epayment. Usually if they are satisfied with the place, they say OK.
With epayments, if they don't have the rent in the bank on the first, the payment bounces due to insufficient funds. Then they get billed for bank charges. I tell them it may even be reported to the credit bureau. They get notified by email several days before the first, so they can't use the excuse they didn't realize it's already the first. Of course the excuse "the check is in the mail" can't be used either. It's a lot different than my calling them on the 5th of the month, and get a check is in the mail thing excuse, cursing the post office.
For instance, this coming month, the first is on a Wednesday. Years ago, when I get paid weekly on a Friday, I won't have the rent till Friday, Nov 3. Of course, I know I should put aside money weekly for the rent, but things come up. So if I get a call about the rent the following week, of course the answer is, I mailed it last week. "You didn't get it"?
Then, in NYC, I would be careful about hassling (I mean training) tenants. They can find little things to complain to the housing department, the worse being you're renting illegal units. I got a legal notice on my door when I was a renter when I returned from vacation and found out my rent check bounced, I called the management company right away to tell him a replacement will be sent. And before the PM lectures me, I reminded him about my roach problem and asked him when he'll get to it. He said he'll get someone over, and didn't hassle me any further. Yes, you could say that's training the landlord.
You write : "tenants often are borderline when it comes to income qualifications." I guess that is where we diverge on our approach to renters. I would rather find someone who can afford the place. When the first interruption in their income comes, and it will come, I want to have people who can weather the storm. And there are soooo many renters out there, I really don't think there's a shortage of renters.
You're right, there's great demand for housing out there. I usually get over 30 - 50 people come over 2 open houses, and get up to a dozen applications.
Years ago, I went with the group with the highest income. Usually for these rentals, the highest income are young professional, like 2 engineer roommates. Sometimes up to 3 for income. Problem with these is the roommates are unstable, and once I rented the apartment to 2 guys, then through a period of 3 years, got over 6 other roommates come and go. Finally got two guys in a dispute over whose turn it is to clean the place, which hasn't been cleaned for over 6 months, resulting in roaches over running the place. I asked them to leave.
I got others with the right income but totally clueless. One called up with a complaint that a doorknob is loose, told him there's two screws that needs to be tightened. Problem? He doesn't own screwdrivers, just left home, and his dad does all his repairs. What did I do? Bought him a set of screwdrivers, drove over one Saturday, and showed him how to tighten the doorknobs.
So, I finally settled on couples, preferably blue collar. With these people, they take care of things, and don't call you about loose doorknobs. I once had gutters on a SFH, during an inspection, was crooked at several places. I was to call a gutter guy when the weather gets better. Some months later, went by, it was all straightened out. I asked my tenant, and he explained the nailed holding the gutters got loose, and spent a good Saturday nailing it tight. No big deal.
Now, with blue collar, they have verified and unverified income. The tenant that nailed my gutters is a union guy with the sheet metal workers union. The job is steady but has it's slow periods. What happens? He doesn't sit home and wait for his unemployment, but goes out and do odd jobs. It's all off the books. His wife has a steady job with the supermarket. His son lives with them and brings in an income too. Never a problem with rent.
What do I see? A tenant who on paper is borderline. When he's out of work, always find something. He doesn't bother me and fixes everything. Once he tried to hang a picture on the wall, drove a nail through the wall, and thinks he hit a pipe. What did he do? Cut the wall open, saw a dent in the pipe, cut the damaged section out, replaced by welding in the replacement. I saw the square path on the wall, all spackled and sanded, awaiting a paint job.
Yes, when I rent places, I see people of all income ranges coming through. However, the ones with the highest incomes sometimes do not make the best tenants. When I say borderline, it's borderline on paper.
All the posts are interesting however Im not "feeling it" as to any real criteria in finding a potential new vendor. The cozy founder (cant recall his name at the moment) outlines a decent scenario of how their system works, although in hindsight I personally need a more forensic understanding of how erent fell over (its getting clearer daily - essentially 3rd parties that caused the system to crash). To me it sounds like there are still multiple 3rd parties, just BIGGER (remember too big to fail a few years back? "The Creature from Jekyll Island" is also a good read to understand it a tad more).
If Im getting all of this input correctly Cozy, Intuit, Retalutions.... all of the value-add vendors (that offer some type of extensible service in addition to ACH) are relying on Stripe - and that's part of Wells Fargo? (for what its worth - Wells aint no Poster Boy of clean living either... they have sure had their issues lately).
We are actively looking for a solution to the mess that erent has caused - albeit rather fortunately we didnt get banged up too badly - just one tenant. All in all, Im not looking for the CHEAPEST service, rather a BEST (that offers security, reputation, transparency, and ultimately some assurances that Ill ultimately get paid! In all honestly Im leaning heavily towards our banking relationships as they all seem to have some flavor of ACH in their portals, I would have one heck of an argument to get something like an erentpayment failure reversed, although they overall lack the integration with our accounting packages or the automation to apply late payments (for example) automatically.
Overall all the automation (while a great thing) has caused many of us to take our eye off the ball and miss some fundamentals. I know I didnt looks deeply to understand erentpayments overall structure - and being that my "day job" is in the tech industry I would have seen the house of cards immediately had I done better due-diligence, just too many 3rd parties and potential breakdowns in the code. Guess as this point Ill chalk the loss up to tuition... we all pay it sometime, fortunately we can also all write this loss of on our 2017 taxes and recoup a few pennies.
Also whats everyones opinion on just opening an account and letting tenants deposit it directly into the account? I'm not sure how I feel about them having my routing and account number but would probably set up an account strictly for them to deposit into then just move the money to another account. This is so frustrating ERP had been reliable for so long, never thought I'd be having to go thru this move again.
This is the system I've been using for about 13 years with zero problems as far as fraud. I have old accounts that are free even with $1 in them, those are given to the tenants and I transfer the money to a different account when it clears. Issues are: bounced checks, if multiple tenants have the same rent rate knowing who made the deposit, & banking hours.
The reason I'm looking to move away from this is the bank isn't open 24/7 and that's just another excuse for tenants to be late if they work 12 hours a day. I look to set up my tenants to easily be able to make a payment as economical as possible. I was at the beginning stages of using erentpayment and luckily it looks like I only lost one payment. Currently I'm interested in Cozy, Rentalutions, and a Deposit only card bank account. Bank of America is the only bank close to my properties that I've found that offers a Deposit only Card. No extra fees unless the card is lost which it's a $5 replacement fee. I personally only don't like Bank of America, but this may be my option for tenants that do not have bank accounts to be able to set up ACH.
@Matt A., after following this whole thread, I've decided that with my one tenant I had on ERP, I'm going to move over to ZellePay for now. They have it through their bank and it looks reliable. I don't know how well it would work with multiple tenants, and you also can't use business names with it, according to my bank. So not a long term solution, but it looks okay for those of us who are still small time landlords...
I finally moved all my units to Cozy. It's a shame eRentPayment didn't know how to handle this situation properly. I lost all faith in them as a company and wouldn't trust them with a dollar.
Cozy is much more modern looking, support is responsive and hopefully works ok, but eRentPayment was more feature packed imo. I will miss eRentPayment, too bad it ended like this.
Has anyone looked into Hemlane or have any reviews? They use stripe and seem to have some of the same options that ERP had that I liked such as automatic late fees
anyone on here actively using paynearme ? How many units do you have @Jordan Sand
@Eddie T. - i'm not using paynearme (all my tenants are now banked as I changed by portfolio) but i know a couple of investors (not on BP) who recommend it.