When should PM deposit rents? I have a new PM company that deposits rent the following month. So rents on the first of October aren't received until the first of November, and I still haven't received rent from October, and its the 5th. My last PM was an individual who deposited rents a couple times a month but he left the field. Their reasoning was to make sure checks don't bounce, which takes what, 3 days. I am trying to be patient with them because they seem to be a larger more established company, and I expected them to be better, but there have been a few red flags.
Personally I would not have gone with them
Call around see what is the norm in your area
Sounds to me like they are trying to gain 30 days interest on all collected rents , however depending on your contract with them any interest they earn on your money is your interest .
Personally my pm sends checks randomly it’s never consistent but I also blame that on the tenets I’ve been at the office at different points during the month and people are always dropping off rents
@Chad C. What was your initial arrangement when you signed on with them? Holding back rents is not that unusual. I used to do it for most clients (bigger ones excluded) unless I had access to an operating account of some type for them. Fronting vendor bills for 1000+ managed units can get expensive and PM's are not banks. People love to think it was a ploy to get rich on the interest (LOL....) but most of those funds were held in non-interest bearing accounts. And with today's rates it really would be negligible anyways.
It is the 5th of the month now but there have only been 3 business days so far. Depending on how big and/or adequately staffed the PM is they may not have completed all the October billing yet. Regardless, you and the PM should have initially agreed to a date the following month by which you'd have received the previous month's disbursements.
There was no agreed-upon date, and they may be open to something different. I am just unaware of what the norm is. Just in three replies you have one "insane", and one "this is typical". When considering a line of credit that I'm using it is about 15-30$ in interest or .25%, but it's not like I'm paying that each month, it was just for the one month that it was delayed, right? Also I consider what I could do with the money to grow it.
I think it feels a lot more worse than it really is. It just seems like I skipped a month when I transitioned companies.
I'm sure it also helps them if there are any expenses towards the end of the month they can take it out of the rent since they still have it.
I don't think there is a "norm" out there with PM companies. Some break the law, and some don't. In Florida, we can not (by law), pay out an owners proceeds until the checks have cleared, and believe me, it is almost always longer than 3 days. I even see people on here complaining about this all the time; Cozy etc... If they were to pay you before the money clears, they are essentially giving you someone elses money, and that is illegal. They are just be extra careful. I personally process owner direct deposits twice a month, the 15th and then again around the 20th for anyone that moved in late or late rents received. This should have been outlined in your management agreement.
@Chad C. I am a Property Manager and I network with thousands of Property Managers around the country. There is no "normal" process.
You should have a written agreement with your PM that spells out when they will pay you. If not, then I definitely recommend you find a new PM because this one is not professional.
There are many managers that withhold the first month's rent. If you started with them in October, they collected the rent and then held it. On November 1st, they should pay you for October. In December they should pay you for November. This enables checks to clear, bills to be paid, reports to be built, etc.
An electronic payment can take three banking days to clear. Using November 2017 as an example, a tenant could pay on the 1st and their payment would clear 72 hours later. Then it's the weekend. Then the Manager needs time to pay any bills on your behalf (e.g. common area utilities on a four-plex), deduct their fee, and pay you. That would be the 6th, at the earliest. Checks can take 5 -7 banking days to clear. That would make the 10th the earliest possible day the PM can pay you.
Let's also not forget the PM can't pull the money out of thin air. If the tenant doesn't pay, that delays your payment even more. If you have 16 units, a couple late tenants can hold up your entire draw.
I've am considering switching to the model you are under. I have had situations where a tenant paid with a check, I paid the owner, and then I discovered the tenant's check bounced. The owner has the money because my check is good so I've now incurred a debt with the tenant that I have to go after. In all my years of management, I've always got the money back but it's still a risk.
My PM pays me on the 15th for all monies received by the 10th. They will send another payment out by approx the 25th for any late payments received. They also usually notify me on the 10th by email if they have not received a rent payment so I can plan accordingly.
Thank you [email protected] G that is basically the same scenario that she had for the reason that she doesn't deposit the same month. I think she has been doing this for 20 years or so. I did look back at our contract and in bold it does say that checks will be issued no later than the last day the month, so that hasn't happened for the two months we've been in agreement. They also didn't send me an owner statement last month, just some general deposit slip. I am tempted to see how long they will go before they pay me, but now that I see that the contract says the last day of the month, anything later is unacceptable.
I use two different PM companies in two different cities and they each send the deposits electronically on the 5th and 7th of the month respectively. Ofcourse it’s just the next business day if either of those days is a holiday or weekend.
After they send it takes 3-5 days to show up in my account, so by 10-12 I typically have all rent
It's common in my market to either settle cash around the 10th of the month or at the end of the month. All of my management companies have settled with me at the end of the month, which is fine by me because I don't feel they should have to float the bill for repairs throughout the month.
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