Collecting the Rent - Posted by docniss

Real Estate Investing Retail
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Collecting the Rent - Posted by docniss

Posted by docniss on July 05, 2005 at 06:46:00:

How do most of you collect your rent. Do you go personally and knock on the door, have a specific day and time, or have the renter mail you the check. I have bought a copule houses in my small town and the renters just drop the rent off at my other business, but I am in the process of buying houses in a town 45 minutes away(I am in this area at least 3 times per week every week) The cash flow is better in this area and there are more opportunities. Just wanted to know from the more experienced how you go about getting your rent each month. We are going to sell one of our businesses and I want my husband to do the property management and collect the rent. He was just asking me if he has to physically go and pick it up. I think so, but I want to hear from more experienced landlords.

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Re: Collecting the Rent - Posted by Marie

Posted by Marie on July 06, 2005 at 22:01:48:

I’m so glad this subject was brought up! I’ve been wondering about it myself. A few things were touched upon, but some were ignored.

  1. What if the property is in a marginal area? Have any of you ever been afraid to collect rents in such an area? In Calif., many times the best bread and butter rentals are in these marginal areas, but I wouldn’t want to collect rents there.
  2. For people that you say are paying in cash; I don’t think it’s wise to go around town with that much cash on you, especially in the areas I’ve mentioned above, and especially with a predictable pattern (the first of the month)! Wouldn’t it be best to require a Post Office Money Order from people who don’t have checking accounts?
    2a) Someone mentioned having them do a direct deposit into your account. How do you set such a thing up?
  3. Aren’t there some tenants that don’t like you showing up regularly to check the property? Do they feel like you’re spying on them? I know there are laws that deal with how a Landlord may or may not have access to the property while it’s rented. Can anyone elaborate on these laws in their area? Anyone from Calif.?
    Thanks so much!
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Re: Collecting the Rent - Posted by Houston in GA

Posted by Houston in GA on July 06, 2005 at 05:43:16:

For us, it’s spelled out very clearly in our lease as well as reiterated during our pre-move-in walk-through. Rent is to due on the 5th each month (IN the P.O. box listed on lease). We give a $50 discount if rent is received by the 1st. Postmarked doesn’t count, it needs to be IN the box. I, personally, don’t like the idea that I need to go pick up rent checks. It’s the tenants responsibility to get them to us, not the other way around (just my take).

We don’t use this method as a way to avoid monthly inspections though. With meth labs rampant in North GA it’s even more important for us to make sure our properties are being taken care of properly. The best way to do that is inspect them monthly. Not to mention it helps you keep up the maintenance before it gets out of hand.

Best wishes to you and your husband with landlording.

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Thanks to all/NT - Posted by docniss

Posted by docniss on July 05, 2005 at 16:18:04:

:slight_smile:

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Re: Collecting the Rent - Posted by Mike-OH

Posted by Mike-OH on July 05, 2005 at 09:29:11:

I collect the rent in person every month. When I collect the rent, I also do a quick walk through inspection of each property and sometimes find problems before they become a big deal (like a water pipe starting to leak). I ask the tenants if they have any maintenance problems. Doing the inspection helps keep them from tearing up the place and keeps them on their toes.

Another consideration is that many renters don’t have a checking account or a credit card. They keep their cash in a coffee can or box and pay cash for everything. I make sure that the tenants know that it is their responsibility to get the rent to me on time and we do aggressively charge a late fee for late rent and promptly evict if rent isn’t paid by the 10th.

Never give the tenants your home address, phone number, another business address, etc. Just more reason for them to sue you.

Mike

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Re: Collecting the Rent - Posted by Mr. Big

Posted by Mr. Big on July 05, 2005 at 07:47:03:

That sort of collecting went out with the Model T Ford in other businesses.

Collect your rent the way any business would collect its debts. Think of the insurance company, the finance company, Sears etc. They don’t go around collecting payments and neither should you.

Give your tenants a choice. They can pay by cheque, direct deposit, even by credit card. But the money must be in your account on time. If not you will follow up with a warning, and an eviction if necessary.

Make it plain from the start that it is their responsibility to get the money to you on time. If possible, there should be a penalty for late payment. If this is not legal in your area, a discount for prompt payment works as well.

If someone is late, take the penalty no matter what the excuse. Let them know you mean business. Make it a challenge to them to get the money to you on time and save the penalty, rather than a challenge to stiff you and get away with it. If they want to play games make sure you are the winner.

You should never give out your home address. If you don’t have an office, rent a post office box for those who prefer to pay by mail. In case someone is late, even one day, the postmark will tell the tale.

You should also consider a management company or a resident manager for properties that far away. It’s not strictly necessary but it could make the difference. You don’t want to get fed up and dump a good investment, when for a few bucks a month someone else will handle the headaches.

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Re: Collecting the Rent - Posted by Frank Chin

Posted by Frank Chin on July 05, 2005 at 07:36:07:

docnis:

Properties I have within 15 minutes drive are 3 families with a lobby downstairs. I installed a mailbox inside the lobby and had tenants put the rent checks in plus other mail that for some reason is mailed to me there, usually junk mail.

Got another one around 40 minutes drive. One time I personally drive over once a month when I rented to 3 young girls. Call the night before and tell tehm I’ll be by the next day, and put the rent check in the mailbox. But in the last ten years, rented the place to 2 families, and they’ve managed to mail the checks out where I receive them before the 1st.

Got some out of state, and I had my sister manage them there, collect the checks, and deposit into a local bank account, so bounced checks can be spotted early on.

I made myself go over to pick up the checks for those with15 minutes drive because it’ll give me a chance to see how tenants maintain the place. My wife took over, she does the 10-15 minute drive more than once or twice and a month but she find the 40 minute drive a bit onerous. The tenant at this further location did quite a bit of improvements, usually include a letter detailing what’s been going on the past month, and a month or so ago invited the wife to pop by for coffee and cake to take a look.

For those around 15 minutes away, I find that when I make an excuse to hang around to clean up for instance, I get to talk to the neighbors who can be a source of good info. Going there on a schedule also gives me a heads up on needed maintenance, and make sure tenants sweep the sidewalks, or shovel the snow as agreed. I even got to chat with a local businesses down the street, going by there to pick up the paper for instance. One advantage was I’m able to have small deleiveries made there, or leave a contractor a check without having to hang around the place.

I find “absentee” landlords has a negative connotation, and people are quick to call code inspectors on people they never see, and perceived as speculators too lazy even to come by and pick up a check. My 40 minute away property coincidetanlly had another rental across the street, and though I don’t go by often, I’ve spent time there between tenancies, and the tenant at this rental commented on how nice it is for an owner to take an interest in the place, unlike his landlord, who’ too lazy to even respond to complaints. In fact, the nosy women next to him got our number from day one, and was encouraged to call if any problems. In the last twenty years, she called several times, particularly on one tenant who didn’t mow, and hung laundry in the front yard.

I recall I came by to collect rent from this tenant each month to take a look see, and he was the only one through the years where I actually evicted.

Frank Chin

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Re: Collecting the Rent - Posted by Baltimore in MD

Posted by Baltimore in MD on July 09, 2005 at 21:58:56:

I absolutely disagree - why give $50 discount, I mean a $50 is a lot of money. I don’t see the point of giving any discount for paying the rent on time - I mean there is absolutely no point at all. It is tenant’s responsibility to pay the rent on time. We have written this firmly in our lease - “Rent is due on the 1st and payable by the 5th of every month”.
We charge tenant’s $50 fine, if the rent is not received by the 5th. Once they receive the late charge sledge-hammer, they pay on time. And then there are others who still don’t pay and then I have to make a couple of phone calls and then go pick up the rent, with late charge INCLUDED. Its nice to receive that extra $50 … anyway.
We also have a clause in the lease where it states clearly that there is a charge for picking up the rent. I agree with Frank, about the part that it builds/sweetens your relationship with tenant better and gives you an opp to be one-up on the repairs, etc.
We only accept the rent by money-orders only or by cash (only if I’m collecting it personally). I have to know that the paper in hand is real money and looks GREEN and when I deposit it in the bank it will only increase my balance. I have stopped driving on the HOPE st; hoping the check will be cleared. None of that check, creditcard, automatic deposit business … its my rental; I have to be in control; I’m setting the rules here. And yes I’m very adamant about that.
If the rent is not received by the 5th; OUT goes the late rent notice, clearly stating the amount owed and any other outstanding issue that I may be having with the tenant. Letter footer clearly states that “this letter serves you as a notice and any instructions that are not followed will be used against you in the court”.
I have used this method very effectively and never had a problem in last 2yrs. I have had all kinds of tenants and headaches (that’s for another time). Once you have a new tenant, police him for couple of months and he/she will know how you operate.
Believe me if you loose control, they’ll eat’ya !

Peace !

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Re: Collecting the Rent - Posted by docniss

Posted by docniss on July 05, 2005 at 16:11:51:

Thanks Mike,
Basically the same thing as I told my husband, but wanted to hear from those with experience. Thanks again. Anissa

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Re: Collecting the Rent - Posted by ski

Posted by ski on July 05, 2005 at 19:55:53:

NEVER NEVER AND I REPEAT NEVER let them know you are the owner. You are just the agent hired by the owner to collect rents and make sure the property is up to code.