The Coolest Way to Collect Rent
In the old days people mailed the landlord a check for their rent payment. There were some problems with this. First it took 1 to 6 days to get through the mail. (One time it took my letter 6 days to get across town and 3 days to get to another state. Go figure.) Then you had to drive to the bank to deposit them. That was a hassle. Then if the check bounced it took a few more days to find out when the bank sent you a letter in the mail. The end result being that it could be the middle to the end of the month before you found out that a tenant who you thought paid the rent really bounced a check and paid nothing.
Another situation that happened in the old days was that occasionally when a tenant was behind and getting evicted suddenly comes up with some cash to avoid being set out. Then they want to meet you somewhere to pay the rent. That is a severe inconvenience. Now with modern technology these things can be avoided. Even the technophobes should agree that some things in the world have changed for the better. The first is online banking. Now I can go online and see my deposits every day without leaving my chair or calling or driving to the bank. So here is the coolest way to collect rent since sliced bread. Instead of having the tenants mail me checks I have them deposit the rent directly in the bank branch. I got a business account with a very large bank that has branches on ever street corner. Then I got some blank deposit slips from the bank and used my printer to print the name and address of the tenant on the deposit slip. (I will show you how to automate that in another page.) Then I mail the tenant a stack of deposit slips with their name and address pre printed on them with my account number. Now all the tenant has to do it take the rent money to their closest branch and deposit the money with the preprinted deposit slip. The deposit amount shows up on my online banking instantly, then the next business day I can click on the deposit and see an image of their slip with their name and address on it. If they deposit cash there are not problems. Some tenants still deposit checks which can be a problem if they bounce, but here are the great things.
- Tenant has more time to pay. The deposit shows up immediately and the date is automatically shown on the deposit by the bank. They can pay by the 5th and still not be late, where if they were mailing a check they would have to mail it much earlier to get to your place by the 5th.
- Less argueing about late fees. The bank prints the deposit date so the tenant can’t say, “I mailed it on the second. Its not my fault the mailman got it there on the 6th. There is an issue with weekend which I will explain later.
- I always encourage them to deposit cash. That way nothing will bounce. It was never safe to mail cash and if the tenant has to get a money order or cashiers check then it costs them money. So this way saves the tenant money, least of all a stamp.
You say what about them having to drive to the bank and waste money and time. Well out of 84 tenants I only had one refuse to do it and still write checks. This is not a perfect world we live in so there are a couple of things to keep in mind.
- It takes work and stamps to print out and mail the deposit slips. (But I think it is well worth the effort.)
- Sometimes the tenants loose or run out of their deposit slips. They can still use a blank one from the bank as long as they have your account number. Some banks will tell it to the tenant and some will not so they have to call the office to get the account number.
- Every month someone who has run out of slips will not put his name and address on the deposit slips. This causes a book keeping nightmare. It is not so bad if you have only a few properties but it you have a lot you will receive rent and not know who to assign it to. This is the worst thing about this system. (Nothing is foolproof.) One way to help this is to try to have different rent amounts for each property. The only thing you can really do is send out late notices to everyone who has not “paid” that month and sooner or later the tenant will call you saying they did pay and then with the date of deposit and the amount you can match the payment up to the correct tenant.
This is what the deposit slip looks like: Here is Word document so you can customize your own deposit slip. You may have to tweak the margins and spacing a bit to align it with your printer. (It downloads as read only but if you save it to your computer you can modify it.)