The forest and the trees: questions after erentpayment issues

[Steven Loveless]

Many of you probably know about (or worse have lost money with) the erentpayment.com SNAFU; I was lucky that I had payments processed right before this all happened. (Link for those that are interested: BP erentpayment.com thread)

I've come to a serious realization from this that I have overlooked a major component of my business. Most landlords go through hoops of due diligence vetting tenants, contractors, and the properties themselves. We have inspections, call in experts, run credit and background checks more in depth than most employers, and ask for references.

However, for the actual lifeblood of the business - cash flow- I found a website that looked pretty and offered some services that seemed to gel with what I needed at the time and signed up. I didn't consider the fact that pretty much anybody can pay to setup a pretty website with good functionality and contract with a third party payment processor. I didn't check their background, I didn't talk to the owner, I didn't check to see that they had insurance or fundamentally understand how they handled my resident's payments. Luckily it didn't bite me in the ***, but it easily could have. 

I completely ignored a concept of counter-party risk - something I am 100% familiar with analyzing in my paper investments, but didn't even really think about in my RE investments.

Now I have to search for a new method of payment and am asking myself the question - "what don't I know that I don't know"?

I'm struggling with these two questions, and would love input from some other folks on BP:

1. How do you vet your financial/legal/etc. third party partners?

and

2. What other counter-party risk am I completely ignoring in my business?