Investor · Lakewood Ranch, FL · Member since 2019 · 72 posts · 47 votes
Hi,
I just completed a deal (duplex) and I inherited a tenant who does not have a bank account. He pays cash to the previous landlord.
I am new to real estate investing and would like to hear recommendations on what systems to use to receive payments in this case. I heard about paynearme and netspend. Any experience with them?
Any input or recommendation will be greatly appreciated.
I have around 20 residents that pay via Cozy. Too easy. I selected a wonderful, older single lady as a resident around a year ago. She had no checking account and preferred to pay cash. I stop by once a month and pick it up. I'll trade a little inconvenience for a great resident any day of the week. Plus, my wife forgives my sins when I leave some cold, hard cash laying around.
I typically require everyone pay online. I do have some inherited tenants who mail checks like clockwork. One tenant is developmentally disabled you an extent and has paid cash directly for the last 20 years. For her, I make the exception and pick it up every month. I honestly think that she would be overwhelmed trying to break that routine. However, I do typically make a hard push to transition inherited tenants to online payments when a-typical circumstances are not a factor.
Good landlording has policies that tenants need to abide by. This includes rent collecting polcies. Keep in mind, that with low income housing, you do need to give them options. Many tenants live on fixed incomes and may not have bank accounts. Also, elderly tenants are not adaptable to new technologies.
For several reasons, I would never collect cash from a tenant. If they do not have a bank account, they need to purchase a money order for rental payments.
Last, when you take over a building with existing tenants, you have a challenge to set new rules and train these tenants. This is not always going to happen easily. Try not to let the tenants train you.
I've heard of "deposit cards" that look like debit cards, which only give someone the ability to deposit cash into a specific account. You can give the tenant the card and he can go to any branch or ATM to deposit his rent.
It's been a few years so I'm not sure if that's still a thing, but you could ask your bank if they have something like that.
Kenny has the right idea with this one. The sooner you're able to make the switch to a contactless payment system, the better. The right one will allow the tenants the ability to connect an account (even a credit union account) to their profile within that system so they can transition to making online payments.
And while some tenants might be reluctant to go that route, the right online payment processing tool can help you mitigate some of that pushback by incentivizing on-time, online payments (ie. in accordance with the CARES Act, most online rent collection companies that do offer reporting aren't able to report for any late payments or negative notes that would have occurred from April 1 through September 31; but on-time rent payments can be positively reported). Either way, I hope this info helps! Best of luck to you @Bernard Sanga!
My one tenant that I inherited paid cash to the PO. Now I own the place they have to go buy a money order and mail it to me. I'd prefer them drive it to my bank and put it straight in my account, but the husband is probably wanted for a cold case bank heist.
I would see if you could get him to pay in an online way. If that doesn't work try and get him to deposit his cash directly into your account at your bank. If that doesn't work then maybe a secure lockbox that he can drop it off into. Lastly, if nothing works keep meeting him to get the rent until his lease expires and then require something different. Atleast he is paying!
Both Bluebird and Serve offer free loading at Walmart. I've helped set tenants up with an account and they use the free bill pay feature to pay for rent this way.
The product is geared towards those who are unbanked and is very easy to navigate.
I personally recommend Bluebird. The Serve Green card is 2nd in line. They can avoid the monthly fee on the green card by holding a $0 balance.
@Bernard Sanga yeah I don’t think Pay near me is really widely used anymore for the small time landlord. I refuse to pick up cash because you can either be robbed, or worse not have a record or payment if you ever need to go to court. Make them go to Walmart and get a money order mailed to you
Systems in a business create efficiency and allow you to scale. If you have even one "exception" to your system, you indeed do not have a system.
Tenants need not have a bank account to deposit cash into their landlord's bank account. There is absolutely no situation I can think of where any potential tenant would be "unable" to deposit rent payments into a predesignated bank account.
Thank you everybody for all the input. I researched all the possible solutions from all the posts and here are my findings:
The first option is with Paynearme - but if you are just starting out like me, you cannot register with them directly because they only cater to clients with 500+ units. Good news is you can still use it - if you pay for property management software that they are partnered with (Buildium, Yardi, appfolio, rentec direct and etc). It is generally starts between 35-60 dollars per month and goes up the more units you have.
Second option (the one I went with) is having the tenant directly depositing cash into your bank account. Most big banks will not allow this especially for regular personal checking accounts BUT you can actually find smaller banks in your area that should accommodate this. I called a few banks around, I'm in Bradenton FL and found multiple banks (PNC bank, Bank OZK, Iberiabank, Ameris bank) that allow it. If you have a business entity you will not have a problem doing this as most bank allow it for business checking accounts.
Other options are renting a PO BOX (150 a year in my area) and having tenants send money orders to it. Or setting up a lock box in the property so they can drop money orders (no cash pls) and you can pick up. - Did not like these options because of the cost and hassles of picking up.
My bank also allowed me to set up a "dummy" deposit account tied to my business account that tenants use to deposit into. There are rules attached to the dummy account that there are no withdrawals from it and the added benefit that tenants don't have my real business account number. I simply then transfer from the dummy tenant deposit account into my real business account on my phone.
@Bernard Sanga Hey again! I've also got folks in Bradenton that i inherited who paid cash, and others who were and still pay via money order by mail.. When I put them on new leases, I indicate that they'll get a $50 rent break to pay by the 1st of the month, and pay via Cozy.co. If they don't do this, then they won't receive the $50 rent price break.
I think it's all about incentivizing the behavior that you want. And of course, there is a penalty for late rent as well.
I found it also helps to explain to the tenants the benifits of using the FREE software. No trips to the local Wynn Dixie or Amscot, saving the $2 or $3 fee each month to get the money order created and mailed, and the $50 price break.
I just completed a deal (duplex) and I inherited a tenant who does not have a bank account. He pays cash to the previous landlord.
I am new to real estate investing and would like to hear recommendations on what systems to use to receive payments in this case. I heard about paynearme and netspend. Any experience with them?
Any input or recommendation will be greatly appreciated.