I would like to know how many LL's here, other than Brad20K, have most of their tenants paying rent bi-monthly or weekly instead of one lump sum due on the 1st ?

Do bi-monthly or weekly rents benefit you or the tenants mostly? Personally, I do not want to be chasing rents every week of the month which I why I do not do this.

Plus, I would have a hard time evicting a tenant that had paid 1/2 rent and not the other half. There are legal complications here.

1. More money. Pay day is every two weeks, or even every one week. Charge more rent for paying this way.

2. Don't chase your rents. Require direct deposit or ACH. I have several tenants with no bank account that deposit cash for me.

I have done 2 week payments adding 20 bux convenience cost, same as the water, electric utilities in my area, the court allows this but not weekly unless registered as hotel which means you can lockout - very hard when they own appliances and I only provide electric range in single family places, the student shacks get appliances but they prepay 8-10 months so no chasing frogs there.

Gevans,

In AL, we can file on partial rent payments, however, there are still legal complications IF your eviction ends up in front of a judge that says "Mr. LL, you have allowed partial payments and now you want to evict just because your tenant is a couple of days past due" ? My judge will say "Come now, lets not be so hasty here and I will give them till the end of month to pay (which is another 2 weeks). You can re-file your papers then if they don't pay.

Roy, I would be mounting a campaign to replace a judge that discriminated against the small business community.

Roy....

Read what I am about to post VERY CAREFULLY.

When the tenant chooses bi-weekly, they are NOT paying monthly. They are paying for 2 weeks of rent at a time. There is no "partial payment" when you pay for rent every two weeks. This point cannot be emphasized enough.

If you buy a six pack of beer today, then 2 weeks from now you go buy another six pack of beer, did you make two partial payments for a case of 12? NO! You paid in full for two six packs. You also probably paid MORE for two six packs vs. one 12-pack case, right?

Same deal with bi-weekly rent. You no longer pay for rent by the month. You pay for rent every two weeks.

I spell it out on the document the tenant signs.

Rent payment 1 of $250 covers 2/22/2019 thru 3/07/2019.

Rent payment 2 of $250 covers 3/08/2019 thru 3/21/2019.

Etc.

Yes, I do PayDay rents, and my tenants are the ones who choose it. I do not "push" it on anyone. My lease has 3 options: monthly, bi-monthly, and bi-weekly. The amount and the due date frequency is spelled out in full for the first year. They put their initials next to the choice and amount they want. Then they sign at the bottom of the payment breakdown sheet that covers payments 1 thru 26 (bi-weekly) or 1 thru 24 (bi-monthly).

It's crystal clear. A judge should be able to see this is not a tenant making partial payments of monthly rent. It's making full payments of rent that is due every two weeks or full payments of $XXX that is due on the 1st and the 15th.

Sid,

I understand what you are saying.

Now, I want to throw a curve-ball at you. Your Class C tenants and my Class C's are probably more alike than they are different. I can get all of mine (18) to pay full rent by the 4th day, so why can't you do the same with your tenants? In other words, why give them a choice? Plus, I can get 5-10% above market rents without a Pay Day plan,...can't you do the same? Am I comparing apples to apples here?

A lot of tenants are tenants because they can't manage their money. You get their money on payday before they spend it on something else, or you might not get it. They can't seem to prioritize their payments and expenses.

Roy,

I want my tenants to choose what works best for them. If they want to do every two weeks, I'm not going to argue. Like your tenants, my folks pay monthly on the 1st almost always pay on time. A couple will be 1-2 days late occasionally. Since we adopted ZT is really has helped with stragglers. If the 4th works for you then that's great!

I've seen examples of your houses, and they appear to have a slightly higher level of polish, which is probably why you can charge more. Again, awesome! So maybe we're comparing Granny Smith Apples to Red Delicious. Perhaps you are C+ and I'm just straight C? I don't know for sure.

My units are clean, safe, and functional. Updated? In some ways yes; others no.

I make about 10% more when we do PayDay bi-weekly rents vs monthly payment. If market is $550/month, then I divide by 2 and round up to the nearest $5, or just bump it $5 if we're already at an even multiple of $5. So on a $550 monthly rate that works out to bi-weekly rate of $280. Over the course of a year, here's how it works out:

Monthly at $550 = $6,600

Bi-weekly at $280 = $7,280.

Cost out of pocket to me? Zero $.

Benefit to me for flexibility is I increased rents by 10%.

I do it because the market wants it and is willing to pay for it.

PayDay plan also solves some problems before they occur.

Applicant: "Can you work with me on the deposit?"

Me: "We need a full deposit, but we can get you in for less out of pocket by only collecting 2 weeks of rent with the deposit."

Tenant: "I don't have all the rent for the month."

Me: "Let's put you on the bi-weekly plan!"

Instead of reacting to common problems, I have a proactive solution in place. The LL is in control and providing answers that benefit both of us vs. waiting for the tenant to come up with an acceptable plan, which I have found they rarely do.

Tenant's are often vague..."Well, as soon as my bank fixes my account I can pay some..." What day? How much? Their "plan" is too vague. I need a date and an amount. The Pay Day plan provides both.

I'm glad your method works. Any land lord with 18 tenants paying on time is doing a lot of things right! I hope my explanation has been helpful.

WHM, you raise a point worth discussing, and I think it can be resolved by looking at the current disparity between lease length and payment frequency.

Tenant: "I don't have all the rent for the month."

Sid,

I would have told the above applicant that a full deposit and full first month's rent is required. Anything less, I would suggest you call the LL next door who does Pay Day plans. I even have his phone number,..want me to call him for you?

Roy, of my 73 February tenants, 6 use payday plan.

It benefits us both.

ACH payment solves the rent chase that concerns you.

Roy just curious. You posted, "I can get 5-10% above market rents without a Pay Day plan,...can't you do the same?"

What method are you using now that you are referring to here? Does it have something to do with Section 8 paying above average rents in your area or something else?

sisco,

I use the phrase 'chasing rents' very loosely here,...I do not chase rents` in the literal sense. All of my tenants visit my bank in the first week of the month and pay their full rent and with late fees if necessary. I have my tenants 'trained' to know if full rent and late fees are not paid by the 7th day, the P/Q will get posted on the 8th day.

Roy, you raise a point worth discussing, although you didn't say it directly....

Are tenants who want to do PayDay plans less financially responsible than tenants who pay monthly?

I have been offering PayDay plans for about 4 years now. Going back over my eviction records since 2014, I see 5 were from Pay Day tenants, and 8 from monthly payers. Over that same period of time, roughly half my tenants were on a pay day plan. 13 evictions isn't enough to draw any kind of general statistic, though.

I think one way I have avoided PayDay plans as a general rule is I don't require first month's rent at lease signing - only Security Deposit and even on that I will take a few payments (but everything must be paid in full by the time they get the keys.)

I would think that if someone is at risk for losing there home due to eviction, that from a LLs perspective......I would want to have as much cash from this person I could.

If that means two halves to make a single whole, I would want to do that. The two halves would give me two weeks earlier indication that something bad is going to happen. This doesn't mention the added benefit of the extra cash.

I would think that if someone is at risk for losing there home due to eviction, that from a LLs perspective......I would want to have as much cash from this person I could.

If that means two halves to make a single whole, I would want to do that. The two halves would give me two weeks earlier indication that something bad is going to happen. This doesn't mention the added benefit of the extra cash.

Of my 20 doors, only 4 are rented to people other than students.

Of those 4, two of them chose a payday plan. The other two are paid monthly on the last day of the month, so monthly pay is perfect for them.

So, really, all my residents are on a payday plan.

If someone is going to wash out, you want to know as quickly as possible. Two smaller payments might equal the same amount (perhaps a tad bit more), but if the person says I can't afford the single half payment, ask yourself - could they afford the whole one then?

For example - if they pay $350 for the two week period and can only pay you $300 but will not be able to pay any more in the future to get caught up.......your out of $50 and a tenant in a few days. You would probably even work with them so that they had 10 days to leave so the $300 rent balance was fully spent.

If they owed you more, but could only pay that same amount.....do you say you have to be out after that $300 is fully spent? Nope, what happens is they get a POQ notice. They are less likely to give you $300 so you might even be out of that.

So where for some people will say - nope I treat all deadbeats the same way. If do the pay day plan you show you are willing to work with the customer, and that initial olive branch can easily go a tad bit further where the none paying resident can leave on their own terms. You could use your pay as you go plan and use a daily basis instead of them just shrugging there shoulders and saying I don't have $700. The logic for them, if I am going to get kicked out anyway - I'm not giving that rich LL nothing.

I'm going to be delivering the pay or quit as soon as possible whether they are paying every two weeks or every month. And with evictions in the same manner.