Collecting Rent for the first month

21 Replies

Hi BP,

Currently setting up our online payment for collecting rent, but until then, this first month I will have to collect it by other means-  I know Cash is DEFINITELY a no-no, but is a money order ok for the first month?  I don't want them mailed to my home address (as well as fear of "I mailed it out but it must of gotten lost in the mail"), so would a money order be acceptable for this time until online payments can be set up?  Thanks!

For the first month's rent and security deposit, I accept cash, money order, or a cashier's check. And I collect it in person at the lease signing, so there's nothing to mail.

Not sure why cash would be a “definite no-no”.  It’s a legitimate form of payment and the only form of payment that’s guaranteed to not bounce or have any issues once you collect it.  Just give the person a receipt when they pay you so there’s no dispute later about how much was actually paid and you’re good. 

Is there a reason you aren't talking about checks?  Yes, they can bounce, but then the tenant isn't paying $3 to get a money order.  If they are already in the apartment, I would think a little bit of trust would go a long way.  If one bounces, I'd insist on a money order after that (and it is in my lease that way too).

I'd get a PO Box, and have them send checks or money orders there.  I have my business bank statements sent to ours as well.  All of my tenants pay via Quickbooks invoices that I e mail to them monthly (ACH transfers), but I have had some that want to send checks occasionally (usually a parent wanting to pay for rent as a lump sum).

Cash is ok, just give them a receipt.  I don't like collecting rent in person (unless it is the first month's rent) and prefer not to deal with cash payments.  When I get them, I feel that I have to take time out of whatever I am doing and head straight to the bank, and I certainly don't want it known that I sometimes have large amounts of cash on me.

Thank you everyone for commenting;  @Kyle J. and  @Kelly N. I was going off the basis from B. Turner's book on Managing Rentals of not accepting cash.  I will DEFINITELY give a receipt!  This should be the only time I would need to stop in person to collect rent- issue still with setting up our online banking payment.

@Caleb Heimsoth   Thank you for your input!  Definitely leaning towards M.O or C.C.

Originally posted by @Doug Phillips :

Thank you everyone for commenting;  @Kyle J. and  @Kelly N. I was going off the basis from B. Turner's book on Managing Rentals of not accepting cash.  I will DEFINITELY give a receipt!  This should be the only time I would need to stop in person to collect rent- issue still with setting up our online banking payment.

@Caleb Heimsoth  Thank you for your input!  Definitely leaning towards M.O or C.C.

Im a tenant and a landlord, I'm on both sides of this stuff. I have paid rent before with money order. It's easy peezy. Accepting cash is a bad idea and personal checks will bounce

I would take cash all day long...so would my clients.  When cash is received, I provide a receipt that both the tenant and I sign that shows the amount, date, and how it is applied (first month rent).  You can also be paid via PayPal (set-up as friends and family for free) which can be set-up quickly.  

The reality is that most of us don't even have checks anymore. And, going to the bank to get an official check just isn't something I would happily do.  Set-up a PayPal account for the first payment until you get your other arrangements completed and be done with it.  

Accept anything except a personal check. You want the money for first and deposit in cash before you hand over the keys. Never let a tenant in until you get it. Personal checks are no good as it may take up to a week or more before you are notified it is NSF.

@Doug Phillips cash is the most secure method of payment, minus safety concerns so be smart about where you accept and bring directly to bank. Cash is universally accepted and never bounces. I believe PopMoney is an ACH transfer similar to Cozy which means the sender needs a bank account. ACH payments are similar to checks so not as secure as cash, but I use Cozy and never have issues. Money orders are easier than cashier checks for most people, but either of those is good if you are not doing cash.

Sorry everyone, I should have clarified- these are all tenant occupied, we closed/took over the property Monday so getting around to all tenants as we speak. 

Thanks for the feedback @Joe Splitrock !

First months rent and deposit are to be in verified funds....PERIOD. Meaning NOTHING that can be reversed, canceled or bounced. You need to have guaranteed $$ before the lease in signed and keys handed over.

After that, its up to you. In todays day and age I don't see why anyone would take personal checks or go pick up cash at the property. The only reason is if you are dealing with low C and D class properties where tenants don't have bank accounts or online access etc.

Cash is a no -no ? For me it’s a yes yes ! In my world I’ll take cash every time . What if it’s counterfeit? Well what if that check or money order or western union money gram is counterfeit ? What if your held up by thugs , well how does that matter if I get robbed I get robbed and my wallet and security is gone either way . Oddly enough Ben Franklin never bounced out of my pocket he was universally accepted everywhere he is instant value in all markets with all people and for some folks he has great tax advantages

@Doug Phillips whatever you decide to do this month make sure they know it’s not going to be an option going forward, especially if your physically picking up at their door. Make it clear they need to pay online or whatever your preferred method of payment is going to be after this first month. Last thing you want to do is spend your spare time going door to door to collect. I know several landlords who do door to door collection and it’s so time consuming. Don’t fall into that trap.

@Doug Phillips I would not give the tenant the keys to the rental until they pay the first months rent. No rent payment then no keys. Then make sure that the online system is set up ASAP so that they can pay going forward online.

Since Doug cleared it up, these are already occupied units.....he's just inherited the tenant already there...so they are in there with keys etc..... In that case, unless there have been documented issues I would take the rent in whatever way it was delivered previously..... preferably in person so you can inform them about the new policy and how you want it from then on....plus you get a quick chat with the tenant, quick look at the unit it.

As for cash payments.... the issue I have with cash is it adds to my work. I want to be as passive as possible. With cash I have extra steps that I have to do....

- I have to go pick it up or meet with you...can't mail it or just drop it off

- I have to make a trip to the bank to deposit it, unless I'm hoarding cash at home

- I have to take measures to insure my safety

- I have to provide you with a written receipt and verification by both parties that $$ was exchanged, when, where and how

All this adds to my time and effort...no Bueno..... I want to be passive. If you want to use cash, check or money order etc, then you are welcome to make a direct deposit into my account at my bank. I can provide the branch and account number.

My tenants aren't in the category where they don't have bank accounts...so ALL mine are direct online payments.

Thanks @Ned J. for your insightful response.  Currently the property is two minutes from my home and another minute from my day job so at the moment it’s not s big deal but I definitely want to make this a passive endeavor. 

Now my problem is only one of my current five tenants has reached out to our welcome tenant letter I left in their mailboxes explaining rent and protocol until online payments is set up.  This makes me slightly nervous as rent is technically due tomorrow (we closed on Monday so not a lot of time to “get in there” if you will). I’ve been there twice since Tuesday at different times and have yet to meet any of the tenants.  Any advice would be welcome. 

Most landlords have been in your position. You sent them th einformation regarding how to pay the responsibility falls on the tenants to insure you have rent payment before the end of day tomorrow. It is NEVER the landlords responsibility to chase tenants for rent. Any that do not pay on time are jerking your chain and should be receiving a pay or quit notice first thing in the morning on the 2nd. You will be surprised how quickly tenants fall into line when they realise they are dealing with a no nonsense business landlord. Any other approach this first month and you will be showing your weakness. They will attempt to control you going forward.