Poll: Do you accept partial payments?

Question

I own a property management company in Baton Rouge, LA. We are in the process of transitioning over to AppFolio, and in the process we have decided to no longer accept partial rent payments and are instead requiring a single payment. This means roommates will now have to figure out on their own how to combine funds and make a single payment.

The reason we made the decision is we are running into issues where one tenant prepays and throws off accounting and makes it difficult to automatically track who has/has not paid in a particular house. Plus, for Buildium at least, there does not appear to be a way to allow individual roommate partial payments but not partial payments by late tenants, which muddy the water when it comes to late fees, eviction, etc.

This isn’t a big problem if you only have a few units and can mentally keep track, but it is not sustainable for a growing mgmt business.

I wanted to see what other managers are doing in the instance of roommates only wanting to pay their individual share as opposed to aggregating into a single payment for the unit.

If you do allow this, how do you keep accounting straight and automate your system for ensuring the other roommates pay on time in the event someone prepays?

I wanted to see what other managers are doing in the instance of roommates only wanting to pay their individual share as opposed to aggregating into a single payment for the unit.

If you do allow this, how do you keep accounting straight and automate your system for ensuring the other roommates pay on time in the event someone prepays?

Nathan Gesner · Answer

It's a personal choice. I allow partial payments, while many other managers do not.

How do I handle roommate payments? The same as any other partial payment. Everyone is jointly and severally liable, so if rent is not paid in full, then the entire lease is in default. If roommate A and B both pay and roommate C pays 75% of his share, they are all in default and they are all subject to eviction.

Bob Stevens · Answer

Ahh, multiple tenants in the home, like the ones I rent to college kids. I have them all on their own portal I even put in the same address with units A - D, Keeps it all separate

All the best

Drew Sygit · Answer

@Nathan McBride as we and @Bob Stevens suggested, setup the property as a fake multi-family, naming units Room #1, Room #2, etc. Then create a separate lease for each roommate under their room. That will allow you to track their payments separately.

You can do this in Buildium, Appfolio, etc.

Bud Gaffney · Answer

@Nathan McBride I allow partial payments because some $ is better than no $.

Nathan Gesner · Answer

The problem is caused by your tenants, not by your software.

I recommend establishing a payment policy and then explaining it to the tenants. I apply all payments to non-rent charges first, oldest to last, and then to rent. Your job is not to track individual payments from the tenants. If Tenant Joe wants to pay his portion three months at a time, you apply it to the charges as they pop up. As his roommates make payments, you apply those towards charges as they pop up. You shouldn't care who made the payment, or what their agreement is privately. You're only focus is to ensure payments are received in full by the due date for the lease. If they are ever short on a payment or late on a payment, the entire lease is in default, not just one tenant that failed to pay their portion.

Nathan McBride · Answer

@Bob Stevens how do y'all handle a situation where one tenant prepays and another tenant does not pay in a month?

Buildium shows that property as not having a balance, when in reality it should have a credit for future months and a remaining balance in the current month.  Obviously you can manually go in and do this, but we need to automate.

Bob Stevens · Answer

We have about 500 doors, and tenants do make partial payments, Does not seem to be an issue, We use Buildium

Dave Poeppelmeier · Answer

@Nathan McBride each tenant has their own portal and account, but they're all moved in under one unit. You tell them that they need to have a zero balance by whenever, and it's up to them to figure it out. If it's not fully paid, then late charges start to apply to the entire unit. As long as you educate people when they move in that this is how it works, they don't usually have a problem with it. On a side note, I have all my students and normal renters on a single lease, I don't rent out per room. You talk about headaches...

Nathan McBride · Answer

@Dave Poeppelmeier we do rent to students, but we are not a student housing management company.  We do not rent by the room and are clear about that.

Do you have separate accounts set up for each tenant?  How do you prevent prepayments from getting your accounts out of whack?

It just became an accounting headache, so we decided to stop unless we can find a way to systematize.

Thomas Tsitouridis · Answer

Sounds painful. The problem that I see here is that people are lazy and they would likely want you to do some thing for them to help set it up. What about giving them prepaid cards that they just fill the cards? I guess the following questions that is, do you take cards as payment?

Poll: Do you accept partial payments?

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