Rental Property Investor · San Diego, CA · Member since 2017 · 60 posts · 29 votes
I just acquired a 4-plex today. I currently have 18 units, and will have another 4 here within the month. As crazy as it might seem to many, I self manage from out of state. I have a reliable maintenance team and listing agent, and historically handle leases and rental payments electronically. This post is not about that, so please no comments on my decision to self manage.
However, one of my tenants does not have an e-mail or a bank account. I inherited this tenant...not my first choice. The prior landlord allowed cash payments, and he never missed a single payment in over a year. I do not allow cash payments. Being out of state, it doesn't work with my business model.
The options I have considered:
My thoughts are that the tenant gets a money order every month and physically mails it to me.
The tenant directly deposits into my account at the bank (is there a way to do this without disclosing my account number?)
I see services that allow the tenant to deposit cash at a local Walmart, but everyone of these services is a separate product that I would have to license or enroll in. I don't want to manage a separate system for one tenant.
Does anyone have any suggestions of what works for them? Thank you very much for your help!!!
Your account number really isn't that big of a security concern.... If you've ever written a check, your acct number was there for all to see.
But like said, chase and other banks are starting to cut back on letting anyone put cash into an account.
Depending how your set up, this could work? Doubt it'd work for 1 person though... https://www.biggerpockets.com/forums/52/topics/108305-using-paynearme-for-rent
@Nicole A.- I filled out the online information. I was directed to a partnership between Paynearme and AMS. I think they can handle a single unit, but there is an initial set up fee of $150.
@Siler Coggins - I tend to agree with you. An e-mail and bank account seem pretty basic requirements, but I also don't want to force out a tenant who pays on time. I just have to balance the level of inconvenience I am willing to assume....and it isn't much. :)
@Dick Rosen - Seems fair....I may just have to go with that. I'm not a fan of the $150 paynearme set up for 1 tenant.
@Amy Beth - That was my original sentiment. However, I may be willing to make an exception for money orders, or him directly depositing it into an account that isn't my primary.
We have been having tenants deposit directly into our bank account for years. We only accept payment sent to our PO box or deposited directly to our account. It has worked great and as another poster indicated anytime you write a check you are providing someone you account number so I never was worried about that.
A few days ago Wells Fargo (our current bank) sent us a notice that they no longer (starting before next months rents are due) are accepting cash deposits from people not listed on the account. We did a little research to find out how many of our tenants have made at least partial deposits in cash and we found out 4 tenants regularly make entire payment in cash and that most of the other tenants who deposit directly to our account have made at least partial payment in cash at least once in the past year.
We called a couple national banks and they have a similar policy as Wells Fargo is enacting. We called the largest local Credit Union (SDCCU) and was told they still accept cash deposits to accounts the depositor is not listed on. If we do not find a better alternative we will need to change accounts to SDCCU (which has a good reputation (much better than Wells Fargo which has a terrible reputation), it is just a pain to switch).
So we are trying to figure out our options ideally in the next few days because if we have to switch banks there is a fair amount of work (our Property payments are all automated: mortgage, water, trash, etc. as well as we have to get the new payment method to all of our tenants that use the direct deposit).
We did consider Paypal but some of our tenants are not IT literate (even though they pay a lot for rent they do not have extra money for smart phones or PCs).
I will talk to my property management partners about the option of not switching banks and requiring the tenants to send money orders to the PO box. Google indicated that Walmart charges $0.70 for up to $1K in August 2017. Seems like a reasonable cost but slight hassle for the tenant.
I have a feeling this individual, (unless they have some deficiencies) does not have a bank account for a good reason. There are a ton of reason why a person may be "off the grid" so to speak, But if they're a good tenant otherwise I'd do my best to create a "work-around"
my business account is with Bank of America.. they have visa deposit only debit cards.. it can only make deposits and it will post right to your business account
I have a 12 unit building in a small town filled with great tenants who are older and never entered the 21 st century, They deposit rent checks in a lock box in the laundry room and once a month my wife empties the box and drains a huge pile of quarters out of the coin laundry machines. One of our tenants is a guard at a nearby casino and has always paid his rent with 100 dollar bills. I finally got him to agree to buy a money order every month and now he deposits that into the box instead. Over time as new tenants come along we will have them do bank transfers but in the meantime we are happy to put up with our tenants preferences. We need to drain the laundry machines monthly anyway and we stop and chat with whatever tenants happen to be around while we are there.
@Edward Burke, no ‘judgement’ here on self-managing, but I must say I am impressed. I’ve self-managed remote properties, and although challenging, it can be done with the correct types of systems. Never tried to that w multi. Or even considered it.
I’ve also owned a ‘local 4-plex’ which was more reminiscent of junior high or high school. Problems ALL the time. I thought my partner and I got a job with lousy pay.
I have a couple of tenants with the same issue, I opened a savings account at a bank that has branches in that city and the city I live in. then they deposit their rent into that account and I get notified when the deposit is made. Has worked great for 5+ years now.
Agree with the money order being the best option. You could even look into opening a business account with fedex and providing the tenant with envelopes pre addressed. Maybe work a clause into your lease stating the that the tenant will be billed back for shipping expenses.
I use Bank of America and Chase for the convenience of my tenants ( based on their location). And both banks are still accepting cash deposit. Crossing fingers!
2 of my tenants are using Zelle to transfer money to phone number. It works well too.
The best solution is to give them your bank account number without the last four digits. If you use a major bank then chances are they have one close to them. All they do is give them that account number and deposit the rent payment. I've used this method many times and just used it today because one of my tenants owed me a balance on one of the utilities. Really easy for them and you get your money asap.
Chase said they stopped in 2015. Wells Fargo is stopping I think next week. All due to prevent money launderers
https://www.bizjournals.com/bizwomen/news/latest-news/2017/11/big-banks-ban-cash-deposits-into-others-accounts.html?page=all
Just a heads up for cash deposits. They could do a money order and deposit that still I believe.
I should also mention that this is for personal accounts. As of right now business accounts are good from my understanding. But I see some investors use personal accounts as business to avoid fees.
Option 2 is what I do for those types of tenants. However, I do something a little different. I open another checking account alongside my primary. I call it (Uriah’s awesome rent deposit account) I give them this number. They deposit it and the day it clears I transfer it over to my main one. There is never more than a rent payment or two in there daily depending on which day I check.
Depositing it at a local bank seems the path of least resistance - then you’re not waiting for a check and going to the bank/sucking up your time. Give the tenant the last 4 numbers of the account. The bank will look up the rest and fill that in.
I should also mention that this is for personal accounts. As of right now business accounts are good from my understanding. But I see some investors use personal accounts as business to avoid fees.
Wells Fargo indicated that our business account will not be able to receive cash deposit from people not listed on the account prior to the start of next month. We have been using this feature for years and are now trying to find the best alternative.
This policy will likely result in us transfering at least some of our account from Wells Fargo.
If they mail you a payment, make sure they get tracking of some sort. I just sent a payment for a contractor and it got lost in the mail - it’s a hassle, make sure they track it at the very minimum. Also, would you be open to using an app like Venmo or Cash? Cheap and easy alternatives.
You have probably had enough answers by now, but I have my tenant deposit directly into my account. I opened an account in a local bank close to them. I gave them a stack of deposit slips from my bank with my account number on them. I get a text when the money is deposited and then transfer it to my regular account.
I started a deposit only bank account for my tenant to deposit rent payments into. As soon and the rent is deposited, I transfer it to my standard rental account. The only downside is, If rent is due on a day the bank isn't open, then I have to consider it on time on the next business day. The bank designates the account as Deposit only and will not allow any withdraws. Only online transfers by me. It's been working well so far.