Rental Property Investor · MN · Member since 2020 · 16 posts · 8 votes
First bigger pockets forum post so thanks in advanced for any advice!
I purchased a 3 unit about a month ago and have turned over 1 unit, will be turning over another Jan 1. Rents were significantly under market so I am turning over in order to raise rents. The last tenant is month to month and would like to stay even with the rent increase however she is putting up quite the fight about how she pays rent. I told her by Jan 1 2021 we will no longer accept check or money order - Only credit/debit or ACH through our Managment software. Her argument is the fees she will incur by paying with these methods. Do I eat the fees just for this 1 tenant just to keep them happy? My only thing is I want to be consistent and keep a firm hand on my properties. (ie. where does the softness end) I almost feel like saying this is how it is matter of fact. I am also requiring the signing of a new 1 yr lease to incorporate rent increase, late fees etc. Am I asking for trouble with this tenant or do I tell them we won’t be renewing their lease?
@Tyler Kortz this is only my opinion, so hear it for what it’s worth and ignore it if you don’t like it. I know a lot of people on bigger pockets talk a big game and tell us how hard they are and rule their tenants! (Exaggeration) but, that is not how this game is played. Real estate is about relationships and you will make it further through developing those even with your tenants. We run less than a 3% vacancy annually with the majority of our units and units we manage for others in challenging C areas, but it’s because we treat our tenants right! We provide them with as many options to pay rent as possible with our Buildium software being our preferred method through credit card or ACH. But they can also drop their rent to our office, they can mail it to our office, they can pay through various retail branches. For gods sake, if they want to send it through a freaking messenger pigeon, I’ll take it.
Your being a bit stubborn and in my opinion setting yourself up for failure long term. If she is paying tenant and not a problem, give her the ability to pay rent how she needs to as there are so many options. If she’s going to bring you a money order, she can take that same money order and deposit it in your bank account
Arguing over not taking a money order is a waste of time and counter productive. I think I read your increase correctly and it works out to like over 2k extra a year? If that’s the case, and you won’t spend that turning the unit and evicting, then stand your ground, but remember what your sworn testimony to the eviction judge is going to be...............judge: “sir do you affirm the tenant is delinquent in rent in accordance with their lease.” YOU: “yes your honor, they are delinquent because I refused to take their rent in the manner they wanted to give it to me after I bought their building and immediately raised their rent a few hundred dollars without making any improvements to their unit because that is the advice on bigger pockets and everyone on bigger pockets said I don’t have to take money orders if I don’t want to and tenants will get in line if I send them a firm letter and stand my ground”
Personally, I don't like charging additional fees to my tenants and I have some seniors who are not good with new technology so I just have them send me a check, no stress.
Can you update the lease when you purchase a property with inherited tenants? I just bought a quad with rents way under market but the previous owner just signed them to a 1 year extension a couple months before closing. This is in Florida. I was planning on just keeping them as is until the lease expired but they are alot of work and would rather just raise rents now.
@Tyler Kortz of the rents are significantly below market, I typically give 60 days notice to get them out of there and get some stronger tenants in there after a rehab.
@Ryan Minekime I did give them 60 days notice from the time rent will actually increase. I haven’t decided if we will renovate between tenants this time around or not. Thanks for the input!
I know it’s hard to believe in this day but many people do not have bank accounts. If you have a low balance the bank fees eat you alive. The majority of my tenants pay by money order.
I bet she doesn’t have a bank account. If you maintain a small balance the bank charges you up to $30/month in fees. It is cheaper to pay western Union for a money order. The ACH fee is not the issue.
@Pete Harper you’re probably right. I think I will compromise with this tenants (and all other tenants) if they choose to pay via check or money order they can deliver it to my bank that holds the accounts for this specific property.
Thanks to everyone who has provided feedback. It is much appreciated!
@Joseph Rios....it rarely pays to force a vacancy to renovate and raise the rent unless you are WAY below market rent and for whatever reason you can't slowly close that gap by incremental rent increase. The cost of the vacancy and the actual renovation costs can take YEARS to even break even. Other factors can come into play also that still makes it worth doing the renovation sooner rather than later...... difficult tenant that you just want gone anyway.... safety of the unit etc. But forcing a 5 year tenant in good standing out, just to do a renovation to make $200/month more, usually doesn't make sense. Do the renovation when there is turnover...... IMHO
For the people paranoid about making an exception for this one tenant and getting sued...... over about $12 a year...... come on........if you have a tenant that thinks they can sue you over $12/year "discrimination", then you got bigger problems.....
Dont overthink this..... eat the fee or just have them do a deposit directly to you bank...... they key is to make it passive fro YOU, not them.......... NO going over to pick up checks..... they want to pay check or MO, then thats fine, but you don't go pick them up..... that's where I draw the line.
Thanks Ned. That is what I have done - I amended other tenants lease and with this particular tenants lease we made available bank check personal check cashiers check and money order. But they must deposit before due date to avoid late fees etc.