Direct deposit rent collection question

[Will Triplett]

We occasionally have a legitimate problem with our tenant mailing us his rent check. When the check hasn't shown up after the grace period we contact the tenant and ask if there is a problem and he immediately drives 20 miles to hand deliver a check. At some time later his original check shows up in our mail box in a bettered and torn condition with the correct post mark date on it, so he is not lying about sending us a check. Does anyone use a method of direct rent deposit or on line system that will automatically take money out of someones checking account?

[Kyle J.]

Cozy does that.  You set it up initially and after that it just automatically transfers the money from the tenant's bank account to yours each month.  It's free to use too.

[Bill B.]

I went with an out of state tenant to their bank and we both signed a direct funds transfer form for the 3 year length of his lease. I get the money on the first every month, even if it’s a holiday or Sunday. Didn’t cost anything and works perfectly.

[Alex S.]

Try Avail.com they are awesome.

[Pat L.]

We ONLY do direct deposit. Venmo etc is the rage.

[Theresa Harris]

If they want to pay by cheque, get a bunch of predated cheques.  He won't have to send them every month and you can cash them on the 1st of the month.

[Connie Chan]

@Will Triplett I use a mobile app called Tellusapp.com. It allows for direct deposits and different bank accounts per property. Also I can add late fees and block partial payments and the tenant gets a reminder and rent receipts. Tenants can also turn on auto pay although I’ve found some of my tenants prefer to trigger the payment each month. It’s free to use and has worked great for me so far.

[John Underwood]

I use direct deposit. They directly deposit into my bank account. No fees, no third party.

I also accept Zelle which is supported by the major banks and is likely already built into your current banking app.

[Shirley R.]

I let my tenants go to the bank and deposit cash directly into my account, but it's getting increasingly difficult to find a bank that will allow cash deposits to third-party's account. My tenants do not have bank accounts. FDIC estimates 10 million adults are unbanked...

[Anthony Solis]

I personally use Zelle. As long as you bank with one of the big banks (BOA, Chase, Cap One, Wells Fargo, etc) funds come through immediately! Also, it makes the transaction easier and more convenient for the tenant as well.. checks are becoming a thing of the past @Will Triplett

[Anthony Wick]

I use PayPal. Almost everybody already has a PayPal account. For the first deposit it's delayed about 5 days, but gets deposited pretty quick in subsequent months. Zero fees for tenant and me. 

Now, I have a question. Are you saying this has happened multiple times to the same tenant? While the USPS does indeed have high speed machinery that sometimes shreds the mail, I'd be shocked to have this happen more than once to a tenant. 

[Victor N.]

@Will Triplett I commend you for trying to find a better option for your tenant. 

Setting up automatic withdrawal from a tenant's account works great but not every tenant wants their account debited that way. Some prefer to actually trigger the payment. I currently use different options which are triggered by the tenant. Some prefer to deposit their rent in my bank account which means that they have to physically go to the bank which is not very convenient but that's what they chose. TD Bank accepts that option but Bank of america doesn't. For BoA you need a specific business account but the plus with that is the bank can provide you with debit cards that the tenants can use for the deposits. The cards only work for deposits.

I also use Zelle which is a service by all major Bank. The tenant initiates the payments. It's a free service and you receive the rent right away.

[Will Triplett]

It has happened twice in the course of six months and definitely looks like a USPS problem at his end.

[Dan Moore]

Originally posted by @Anthony Wick:

I use PayPal. Almost everybody already has a PayPal account. For the first deposit it's delayed about 5 days, but gets deposited pretty quick in subsequent months. Zero fees for tenant and me. 

Now, I have a question. Are you saying this has happened multiple times to the same tenant? While the USPS does indeed have high speed machinery that sometimes shreds the mail, I'd be shocked to have this happen more than once to a tenant. 

 You don't have our postal workers. I cringe every time something is coming USPS. Left behind the gate in the bushes. Marked as delivered. Search the entire property (4 houses, one business, not a minor thing.) Two days later it shows up magically on the door step. 

With the details he's provided, I'd believe the tenant. 

For what it is worth, we are now using Cozy. A tenant recently moved in and was using a similar service. He liked that his service reported to the credit agencies his on time payments. I looked into Cozy and moved over to that because it also reported to the credit agencies. I'm happy to help with on time payments aiding my tenants in their improving credit scores, and I'm glad to have the stick (vs. the carrot) that if they don't pay on time, that could be reported as well. 

https://cozy.co/blog/build-your-credit-history-just-by-paying-your-rent/

Having handled collections in my first job out of school, I know that people will pay the bills that ding their credit and ignore the ones that don't. We couldn't ding their credit and it was very frustrating getting strung along with no penalty to them. For that reason, if no other, I like Cozy. 

[William W.]

@Dan Moore

I don’t believe you can ding their score with Cozy since the tenant has the option to turn off rent reporting any time they wish. Still, I find it does provide an incentive to pay on time though, since on time payments will improve their score (if rent reporting is turned on).

[Dan Moore]

Originally posted by @William W.:

@Dan Moore

I don’t believe you can ding their score with Cozy since the tenant has the option to turn off rent reporting any time they wish. Still, I find it does provide an incentive to pay on time though, since on time payments will improve their score (if rent reporting is turned on).

That is true. But you are assuming that people who cannot manage their money, will instead manage their Cozy account. Professional dead beats will certainly know the score. Hopefully screening will eliminate the professional dead beats. Hopefully!

[Patrick M.]

The checks from 5 miles away get sent 55 miles away before being sent 55 miles back to me.

I use Zelle and love every minute of it. All rents are in the account on the 1st of the month.

[Will Triplett]

Thank you all for participating in this discussion. It has helped me immensely and it appears that I have several options that I need to review and then decide what the best fit is for my situation.