Don't accept checks from renters!

15 Replies

in my experience of accepting checks half the time they seem to bounce. Not only do I not recieve my rent I get charged a bounced check fee.

low income rentals we do money order or certified checks only.

Higher priced units or tenants with a proven track record we will take checks from.

Promotion
Invex Capital Group
Real Estate Syndication
Cashflow Your Way to Freedom!
Invex Cap is a Texas based Real Estate Syndication that focuses on cash flowing real estate
Join today!

We get our money through Check Writer Authorization - meaning, the tenants authorize us to write checks directly from their bank accounts so we get paid without waiting for the rent checks in the mail.

I would not accept the first month's rent and deposit by check, but after that, it's usually OK. Occasionally one will bounce, but it's a hassle (and expense) for tenants to get money orders each time and you don't want to be dealing with cash. As long as you don't accept the first payment as a check you should be fine.

No checks ever. Money orders for the deposit and first month's rent, and either www.erentpayment.com or direct deposit into my business account at the bank. On a rare occasion, a payment made through erentpayment.com will be returned for NSF, but I don't get charged.

I will have to look into that erepayment.com. I have never heard of it before. I hate having to go to our tenants houses to pick up rent all the time. Thank You.

I do not accept checks for first month's rent or security deposit, they must pay with a money order or certified bank check. A new unproven tenant could bounce a check on you, they'd be in the property and then you'd have nothing and would have to evict them.

I typically will accept checks for rent after the first month until a renter bounces one on me and then they must pay by money order or electronically. I'm also very aggressive in collecting the NSF fee, $45 even though my bank only charges me $12.

One downside to money orders is I've had tenants say they mailed them and I never received it. Because a money order is almost like cash it typically takes 30-days to cancel a money order and get a refund. So the tenant says "I don't have the money to pay the rent because the money order was lost in the mail" and they show you a stub for a money order for the rent.

This happened to me with a relatively new tenant (been in the property 1-2 months) and they ended up burning me and I evicted them. Just because they show you a stub for the rent amount doesn't mean anything, they could have wrote the money order to their name and then cashed it. Funny enough this happened to me again 3-4 months later with a different property. They said "I live pay check to pay check" and couldn't pay until after they canceled the money order. I told them nothing personal but I had been burned before and I would be forced to evict them if they didn't come up with the money and miraculously they did.

In the past I had my tenant's setup electronic payments using the service my bank (Chase) offers but sometimes the payments would be "pending" for up to 5-6 days and the tenants could cancel them before they cleared. I had a "problem" tenant do this to me.

I now use a service through my property management software where they pay electronically and it clears much faster or they can pay at any 7-Eleven or Ace Cash Express using a coupon I mail them. It costs them $4 to use this option but its nice because the payment shows up immediately and tenant's can conveniently pay same day without having to use the mail or setup something electronically (for those tenants who are technologically challenged).

In my lease it states they will be charged $25 + expenses for returned checks. So they pay what my bank charges. I haven't had a returned check in years.

I did have one tenant one time I asked to pay by money order because of 3 bounced checks. They didn't stay much longer any way.

Bounced checks are considered fraud under many state and local laws. If they refuse to make good on ALL expenses incurred, the local police might help with collection. And some places have old limits where low amounts such as $500 are considered felony theft. Not what you would want to use as your first recourse, but worth considering as a backup.

I have my tenants do a direct deposit into my account. I like it for the fact the bank will only accept cash or certified funds. As I grow I might look into using a service such as erentpayment.com in the future but for now the current system is working.

Promotion
Speed To Lead
Buy hot seller leads w/o subscription
Buy daily seller leads that are actually ready to sell
Finally there's a place where you can buy leads that asked for urgent help selling their house
Sign up for free

I have been living overseas for so long that I do not even have any checks. I do not see the need for them anymore. There are too many trusted ways to get payments that the time and effort of a paper check does not make sense to me. As Joe Gore pointed out, there might be some regional issues with this as well.

We only accept checks from our tenants and charge them $30 if the check bounces, it happens occasionally.

All payments (security deposits, fees and advance rent) must be paid at least 2 weeks prior to move-in via check but they don't get the keys or a lease signed by us until move-in day. We have never had a tenant bounce an advance check but we have had several pay with cash if they were inside the 2 week window.

Sounds like your lease needs a provision that the tenant is to pay fees associated with checks that are dishonored for any reason.

If you want to mitigate the bouncing and associated additional fees, you can get a bank account at whatever bank your tenant uses. When you get a check and attempt to deposit it at the same bank as the tenant's bank, you can request that the teller check first that there are sufficient funds to cover that check. If sufficient funds exist, then you request that the teller make it a cash deposit, to draw the funds out from the tenant's account before the tenant can take the funds from an ATM. The bank usually won't do a cash deposit if the payee isn't a real person BTW.