Entering the rental business and I have a few questions regarding the following items: Contracts, backgrounds, and payments.
Do you come up with your own contracts or outsource them, i.e. lawyer, contract service, etc
How do you perform backgrounds?
Accepting payments? Whats the norm? long ago when I was a renter I mailed my payment check to the landlord. Is this still the most popular way?
Thanks, you are all awesome!
I rent out the spare rooms in my house and the contract I use is state-specific from NOLO. I did my background checks on my roommates via MySmartMove (BP has an affiliation discount). I accepted the first payment via cash or money order only, all subsequent payments have been by check and were given to me or slid under my door.
For my out of state rentals, my property managers handle all those details. I just review the lease to make sure it's solid. I like to approve the tenant application as well. Payments, I have noticed, are usually made via money order or cash. This will depend on the class/type of tenant in your target market. More affluent and younger crowds will most likely be paying by direct ACH/deposit.
Most RE landlord/tenant lawyers should have their own lease they'll provide and can tailor to your needs. It won't be too expensive.
I use tenantbackgroundsearch.com
as for collecting payments. Set up several deposit only bank accounts at a large bank with multiple branches. Tenants deposit rent directly into account I mange online.
I use a lease that I created by combining material from two local sources, the sample here on BiggerPockets, and then a review by an attorney.
I accept payment at move in in cash or money order only. One full month plus the full deposit, regardless of the move in day. Second money gets prorated if there's a mid-month move in. I give tenants deposit-only ATM cards and they deposit money directly. There are numerous other ways to accept payments. Mailed checks is something of a last resort.
Jon Holdman, Flying Phoenix LLC
I have one renter that loves PayNearMe for paying rent. Check out BP's affiliate link Here for a discount setting that up with no set up fee. Renter will pay in cash at 7-11, ace cash express and maybe a few other places. It cost them $3. You get an email about 5 minutes later that its paid and it goes into your account a few days later.
I have others set up on erentpayment.com. It drafts their account monthly for rent. I pay $3 for that. I like this one because the renter has to go through me to stop or change the draft.
I'd suggest online methods of some sort for payments. No need to drive to the PO box or go deposit the checks. Additionally it has all the reports online so you can keep payment history etc.
Since I am a realtor I have access to all the forms from the board of realtors. I am sure you can get a copy in your state from a realtor and just fill in the blanks. Of course if you have any legal questions you can always ask a lawyer and pay him a one time fee.
In the beginning I would collect rents through the mail via personal checks or money order. I would always recieve them a few days after the first. Now I use buildium (property management software) and I am able to set up direct deposit/ACH. The tenants can pay check or credit card and there is no chage to them or myself, very user friendly.
This software also allows me to run credit checks. Pretty sweet!
I guess another question would be about early payment discounts. I am again citing my past experience with being a renter. If I paid my rent at least 7 days before it was due they (management) took $25 off my total rent. Does anyone do this?
Thank you all! Great info, now off to do some more research.
I offer a small discount if rent is paid by 9:00 PM on the 1st. Late fees start on the 5th.
Jon Holdman, Flying Phoenix LLC
@Brandon Cooper my incentive is if they don't sign up for my ACH (ClearNow) then I charge them extra $30 for processing the payment. erentpayments, clearnow, or similar ACH is the only way to go BTW.
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