Does all move in money, 1st last and deposit need to be guaranteed money such as cashiers check or money order? Also when said prospective tenant should earn 3 x the monthly rent is that gross monthly or net? Thank you!
@Glenn Stallings I have always collected all move in fees in the form of good funds. I always require money order or cashier's check for this initial move in fee. I switched over to using a more professional software recently which allows tenants to pay move in fees through the software, and my very first tenants bounced `1/2 of their move in payment. They have subsequently turned out to be less than stellar tenants and I look at this cashier's check/money order as a last line of defense now and will not budge on it.
In terms of a tenant's income, you are looking at their gross income when we are discussing 3X the rent. I also would check to make sure that they don't carry too much debt and that they have enough net income to qualify, but normally 3X the rent in gross income is a great way to go.
@John Warren Thank you for the information. For the first time I used Zillow to collect a security deposit due to tenant coming from another state and worked out fine, but after what you said I will require cashiers check in most cases.
@Glenn Stallings I always require move in expenses to be cash, cashiers check or money order. This is for two reasons.
1. This avoids scammers. There are several ways to scam using check or ACH (how Zillow collects). One way is cancelling payment later. People will move in, then cancel payment. They can essentially move in, live there several months and never pay a penny by doing that. Another method is using stolen access to an account. The payments eventually get returned.
2. Avoids a situation where a check bounces after they move in or after a lease is signed. We require deposit and first months rent before even signing a lease.
I think the risk is even higher with out of state applicants because you may not get a chance to meet them. I have out of state people send me a cashiers check via certified mail and ask for the tracking number. I know you said it worked out fine, but "don't confuse luck for skill" as the old saying goes. Maybe 99 out of 100 times there will be no problem, but you put processes in place to catch the 1 of 100.
@Joe Splitrock thank you for your information. I definitely will follow your advice from this point on👍
Do you want to take a chance their funds may bounce?
It's not real if it's not available to you to use TODAY!
Take the check or money order, or the IOU.
Until it's yours to use, you don't have it.
Once they are in, it will cost you to boot them out. Many times I have had that check bounce, even when the reason is not a fraud thing.
For move in fees, we only accept cash in person. ie, folding green stuff. No bank checks, money orders, or anything besides cash. Some people are taken aback by this but we've never had anyone refuse to do it. I then make it clear that it is the only time we take cash for rent. All subsequent payments are direct deposits into our bank account at a bank local to the property. We've done this for our entire rental career based on the advice of an early mentor who got burned badly by a bunch of fake stuff. Also, since covid crap, we also collect last month's rent which we never required previously. We haven't changed our standards to any extent but we are much less willing to deviate from them to "give someone a chance". These are the one's that have payment struggles. There is such a high demand for rental properties due to limited inventory that the last few never even got marketed.
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