Now that most banks have implemented new rules about people making cash deposits,...has this had a positive or negative affect on your tenants who visit your bank and make direct deposits?

Autodraft, autodraft, autodraft.

NE,

I continue to use my small, local bank, and we haven't had any problems with cash deposits. I call it "small, local"-- it has about <20 locations in OK and about 25 locations in TX, but it focuses on catering to small towns which may or may not be able to support more than one-three banks, although it seems to have established a few big-city branches in the last few years.

Some of my tenants who don't trust banks will use money orders, so they have a second backup receipt.

Some of my tenants who presumably don't care, or don't want to spend the time or $ to get a money order, generally use cash.

WMH,

This month I noticed where my tenant's parents (parents not on the lease) are paying the rent using their own personal checks drawn on an out of town bank that I have never even heard of. I am walking on egg-shells right now praying I don't have a banking NSF train wreck in 2-3 weeks.

WMH,

If there isn't enough there, it doesn't pull. File eviction.

Roy, that might have been true 20 years ago, but now it only takes 2-3 days as all check clearing is electronic.

Who are these "most banks"? I have dealt with cash deposits at my local regional bank for years. Zero problems.

I'm with the others...auto draft. TAKE the money the day they get paid vs. waiting for them to decide to pay you or not.

If their account is 1 penny short, it will bounce. Then a late fee and chargeback fee kick in and they have 72 hours to square up with me in full or I file eviction.

I agree....too many "what ifs?" But just to show how "what if" fits on the other foot....

What if you don't choose auto draft and the tenant decides to drink their paycheck or blow it on Mega-Millions Lotto? Cash deposit at the bank have at least as many risks as auto draft, if not more because the tenant has to decide each month..."Do I want to give Roy this money, or do I want to go party / buy new rims for my car / take a trip, etc.?"

"Do I want to give Roy this money, or do I want to go party / buy new rims for my car / take a trip, etc.?"

When you say to take the money the day the tenant gets paid: who gets paid exactly on the first of the month? No one I know, except landlords LOL!

Most people are paid either bi-monthly (2x per month) bi-weekly (26 times per year) or monthly, and with my tenants who are paid that way, they are paid either on the 23rd or so (my teacher tenants) or the 5-8th (Social Security.) A few are paid weekly, on Fridays.

we don't take payment from anyone not on the lease. Should the check bounce-- you have no recourse. You have not supplied any service to the one writing the check. Yes you can evict or start eviction on your tenants for non pay of rent. They didn't write that bad check.

This goes for applications also. App check bounces-- nothing can be done because you haven't given them anything for that app fee. This is what judge told me many moons ago. It's like putting something on layaway at walmart. You write a check and its put on layaway and the check bounces-- the person writing the check has not received anything-- the product is still in the store.

Ally NJ-- "depositing the cash rent" you don't do that? whoever has? yea use it for expenses-- like trips and diners out?

IRS if you're reading this -- that was just a JOKE. ALL cash is deposited in "appropriate place.

Relax, myob. Cash can be kept on hand in a business to handle expenses. There is no law requiring you to put it in an account. As long as there is appropriate documentation of the expenses (receipts, invoices, etc), the IRS will allow the deduction as long as the expense is "reasonable and necessary to carry out business activities."

$100 Lunch? No.

$100 to purchase blinds for property 123 Anywhere Ave? Yes.

Finally, and this should not be used as an excuse for sloppy accounting and/or not paying taxes that are legally owed, but my friend who is an IRS auditor told me 3 years or so ago that since the agency's budget was slashed, they almost always only audit folks who make over $250,000 / year. Theoretically, they COULD audit someone who made less, but it simply isn't worth their time and other resources to try to catch small fish.

Less than one half of one percent of people making under $1/4 million in any given year get audited. So fewer than 1 in 200. You could go your whole business life (50 years) and have a cumulative 1 in 4 chance of being audited, and as long as your documentation is there, you're good to go and nothing to fear from operating on a cash basis.

But now back to the topic: Roy, if your bank isn't accepting cash, they will still accept cashiers checks, money orders, etc. But again, I strongly recommend auto-draft. Ever since I started doing that, my only question has been, "Why didn't I start doing this after Jeffrey told me to back in 2016?"

My tenant who make direct deposit just move the money from their account to my account by wire, or whatever process the bank is using.

If they mail me the rent, I prefer a personal check. That way if the check doesn't arrive, they can place a stop payment and issue me another check. If a money order doesn't arrive, it takes quite awhile to get the money replaced. The post office does indeed lose things. "The check is in the mail" isn't always a lie.

It takes 3 weeks for the bank to notify you a check has bounced, but they know within a couple of days, so if you are worried, you must call them to verify that the funds are there

Sid,

Okay, Okay,...what company handles your Auto-Draft? Clear Now? Does the tenant need a checking account (with money in it) to make this work?

Roy, my local, regional bank offers ACH service thru their Business Banking Division. To do ACH I had to have a Business Checking account (which I already did) and a Cash Management Account tied to it. Ask the Business services dept at your bank or try ClearNow here.

Btw, don't try asking the Bank tellers or consumer accounts people. The ones at my bank acted like they'd never heard of ACH. It's strictly for business people.

Roy, back in January in Springfield MO at our MO /ARK monthly LL meeting, I was asked what had been the biggest improvement in my operation for 2018?

My answer was ACH.

Sid,

6 months ago, I asked the branch manager at my local WF bank about ACH services. He looked at me like I was from Mars. He said,...I really don't know much about that,..I think that is what big corporations use to clear checks with.

Now, based your advice here, I will go ask again and hopefully find someone who knows more about ACH. I would like to use ACH services just like you do.

Roy -

Some can do ACH debits from a debit payment card, some cannot. It depends on the type of account they have.

I have students who have "checkless checking accounts". At least, that is what I call them. They are set up to not get checks, only use a debit card, but they are essentially a checking account that they don't get checks for.

If it is a paycheck card, it just depends on how the employer set it up.

Roy,

YEARS ago we stopped poking at this with a stick. LLs get odd payments if they allow it.

Our method is autodraft.

My lease is clear: 'Autodraft is the method of payment. Handling paper monies will result in additional fees."

Mail or other delivery serves are not acceptable.

Personal checks are not accepted.

We only accept cash at lease signing because banks are often closed at those times.

The Walk In bank deposit is available by permission only.'

ONLY a few who cannot add 2+2 pay with the Walk In Bank Deposit account.

Our autodraft TAKES the money the same day they are paid. No time to spend it on booze.

Tell the res to put OVERDRAFT PROTECTION on their account.

If a $800 rent draft bounces we call the bank and ask "Will $700 clear this account? $600? $500...then we write a draft for the amount that will clear and CASH IT from THEIR bank.

.

From my banker buddy: banks can hold an NSF check for 20 days and keep hitting the account holder for daily late fees OR to STACK the checks (send thru the biggest so all the little checks bounce)SO THAT your account bounces and they get fees.

He says banks make more money on bounce fees than any other category. They are NOT concerned to protect your account.

Roy -

I know WF does ACH origination as I used them in a previous life. Ask your business banker about their CEO product, which handles ACH.

1st post here....

I have opted for the reduced drama of all SFR's.

So each tenant is responsible for for the water and sewer bills which are variable each month.

How do you setup a ACH in this situation?

FYI, I still have one tenant who pays cash. But my bank let's me deposit the cash each month. It's less than $1,000 though.