Having been a landlord since early 1994, I feel pretty confident in saying that I have tried just about every conceivable way to collect monthly payments from my residents. I want to go over some of these methods and tell you the pros and cons of each technique. I’ll finish by telling you what I do now.

personal collections

Scheduling appointments to collect payments was never a consideration for me as a standard way of doing business. I am too lazy and I consider it is the responsibility of the resident to pay me if he wants to stay. The advantage is that he immediately knows who has paid and who has not. You still don’t know if the check will be paid in good funds, assuming you were not paid in cash or certified funds.

Of course, I have met with residents to collect payments on special occasions when the resident was late or tried to avoid late fees. Once again, this is a waste of time in my opinion.

I now have a designated spot for residents to drop off payments if they want to go this route. Additionally, chronic delinquents lose the privilege to pay other than through certified funds in the mailbox. Once they have paid consistently and on time for six months, I will consider going back to the standard payment system which I will discuss later.

If you decide to meet with your residents to collect, I recommend NOT meeting at their personal residence. Don’t let any of your residents know where you live. In fact, my opinion is that you should have an unlisted phone number for your home line and that you should spend as much time as necessary removing personal information from the various Internet directories. Sorry for the tangent here, but I thought it was important enough to include.

I do not recommend this method as it requires too much effort on your part.

The check is in the mail

This is probably how everyone starts out. The payment does not arrive and the resident claims that he is in the mail. If it happens, is it even good? Who knows? The advantages of this method are that it is very common and if you have a large tenant it can be an easy way to collect payments.

Disadvantages include reliance on the resident’s memory to write the check, properly address the envelope, properly postage it, and actually mail the payment. Plus, trust the postal service to deliver payment to the correct address and in a timely manner.

I have even gone so far as to provide payment coupons and postage paid envelopes to residents to eliminate some of the risk associated with this methodology. I did not find this extra effort to produce any noticeable difference in results.

I do not recommend this method as it requires too much input from your resident.

The resident makes the deposit

I realize that many of you will be totally opposed to this idea, but I have tried it for years with some success. Before I had a drop box location, I would give my defaulters a bank account number where they could deposit the monthly payment directly.

Naturally, I went from that step to providing pre-printed deposit slips so the account name and account number would not be inaccurate. In this case, this extra effort did reduce residents’ monthly “I don’t have such information” phone calls. I’ve never been so worried about a resident trying to make a withdrawal from my account, although I’m sure it’s a possibility. To reduce this risk, you could have a separate bank account for deposits periodically and transfer the funds to another account.

Another consideration here is that you could potentially find yourself with a failed eviction for accepting partial payments. Whether or not a judge would consider a tenant putting down a small deposit in a last-ditch effort to avoid eviction as “implied receipt,” I can’t answer. So far, (knock on wood), none of the people I’ve evicted have tried this angle.

However, what will invariably happen is that residents WILL make partial payments. The truck broke down, the legal fees for child custody, etc. get priority over the shelter and the few remaining funds end up in your account. Then you are left with the fun job of trying to determine who paid for what.

The advantages of this method are that you don’t have to make a trip to the bank, and if you have online banking, you know in a day or so if the deposits are there. Again, you don’t know whether or not they paid in pennies or stole checks from your neighbor, but at least you see the deposit made.

I don’t recommend this method as a standard way to get paid, but might consider it for the good payer who just had a bad month.

Print the checks for them

(Thanks to Earl B. for the next tip)

I don’t remember when it was, but probably about eighteen months ago, one of my friendly competitors suggested I try this service. One of his friends was using it successfully, so I signed up. It’s inexpensive and he allowed me to just sit down and print all the monthly payments at once. I signed up all the new residents and bribed some of my existing residents to join.

The service is presented to residents as an automated draft service and they sign a one-page form authorizing you to debit their account. The program itself is a Windows based software application that allows you to print these “Sight Drafts”.

The advantage is that the payments can be set up as a recurring monthly payment and you can print them whenever you want. So instead of waiting for the mail to arrive, just sit back at your PC and hit print. Checks come out of your standardized printer. In other words, you don’t need any special equipment. On the first of every month (or whenever) just head to the bank.

Again, you don’t know if the resident has good funds or not, but at least he’s not waiting to make his deposit. One of the downsides is that you will have to buy check stock, but I think I received 300 checks with my initial purchase.

Another advantage of using this software is that you can set up your own invoices so that each month you only print your recurring invoices or a set of blank checks with your information pre-printed.

I don’t use this method anymore, but can recommend it because it worked well for me.

Direct deposit

For the last year I have been using a new service that I found. I looked high and low for a quality, reliable direct deposit service that wasn’t designed for large apartment complexes. Everything I ran into had a fee structure that was out of my league.

Again, as before with the software application, I signed up all my new residents (company policy, don’t you know?) and bribed some of my existing residents to join as well. I think it’s fantastic.

Residents receive an email notifying them of the next draft and it’s all run through the banks’ Automated Clearing House (ACH) systems, so there’s absolutely nothing you need to do. do.

The resident’s account is automatically debited on the designated day and I receive an email the next day showing me which accounts were successfully redacted and which failed, if any. Three days after that, the funds are automatically deposited into my account.

Residents know it’s coming, and since it’s automatic like other wire transfers, it requires no effort on their part. It also doesn’t require any effort on my part. It’s the simplest solution I’ve found and very affordable to boot.