Today's question is "What are some of the best ways to go about collecting rent payments from tenants?"
When you're just starting out as a landlord, one of the biggest challenges can be how to go about collecting rent payments from tenants. Do you take cash, check, electronic deposit? The answer to all of the above is, Yes! But as we've discussed in earlier videos, you want to get systems and processes and place to help streamline your business and make things easier on yourself.
Now let's take a look at some of your options.
Cash is king! But taking cash can also become a liability. One problem is that it can be hard to track. Especially if you have investors in your business, losing track of the cashflow and prove to be very problematic.
Checks and money orders are along the same account. We still accept them but the goal is to get OFF of that system and have everything done digitally.
We're looking to get all of our payments received online. There are a variety of apps out there to choose from. Do the research and find out what works best for you. Having them pay online through your website is a great option. It's free for the tenants if they're doing an ACH, they also have the option to use a credit card and you can set it up where the fees are charged to the tenant as a convenience fee.
The goal is trying to get the rent payments into your account without putting in a ton of effort. Such as collecting checks or cash and takin those to the bank. Instead look for ways to scale. The biggest opportunity right now is tenants paying through your website using ACH.
Think in terms of the future and sustainability. it might be easy to handle collecting cash when you only have 3 units, but when happens when you grow your business to 30? Put systems in place that allow less effort on your part with the potential to scale to a huge level.
As always, please email us any real estate questions to [email protected] and we will answer them on an upcoming episode!
Learn more about The DeRosa Group at http://www.DeRosaGroup.com or on BiggerPockets.com - https://www.biggerpockets.com/renewsblog/author/mattfaircloth/
Matt & Liz, founders of DeRosa Group, were recently second-time guests on the BiggerPockets Podcast.
Check it out: https://www.biggerpockets.com/renewsblog/bp-podcast-203-finding-deals-funding-contractors-mentors-matt-liz-faircloth/
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Learn More about The DeRosa Group by Checking out our suggested videos:
How I bought a 18 Unit apartment with NO MONEY out of Pocket
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How to Remove a Bad Tenant (without having to evict)
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I have a tenant that mistrusts banks, plus is involved in a lawsuit against a bank. He keeps like $10 more than the rent in his account, but his wife gets lunch or something from the account and his checks are always bouncing. We have agreed to cash payments as he is tired of the bounce fees!
I am in the process of setting tenants up with ACH automatic payment. It goes to an account dedicated for rent payments. My bank sends me notification on the app when there is a deposit made to the account. I then do an online transfer of funds to the primary account. The depositing account is empty most of the time so I do not worry about the account being compromised. There is no fee on either side for this transaction.
It also provides documentation of funds deposited. If I charge a late fee I can show them $ went into the account.
What pricing strategy do you recommend for pricing repairs on a 8 unit building 3 hours from where I live. The property manager also does the maintenance. I will essentially be writing the property management contract what terms do you recommend. 7% fee? Cost plus? Pictures of repairs before and after? Thanks!
Hey Jacob - I would do cost plus, meaning the actual cost of the renovations plus an agreed upon construction management fee. And yes pics before draws are released and plan to drive out there at least once every 2 weeks to start.
"This note is legal tender for all debts, public and private" ...but it won't matter soon. Once the government forces us to go all electronic "for our own good", cash will be a thing of the past. And so will our freedom.
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Telegram recently announced it would launch an ICO for its blockchain platform.
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