If you have at least 5 tenants, what percentage of them can only pay rent on or just after 1st Friday of any month? Obviously, this means they are living paycheck to paycheck. 2/3 of my tenants are like this and it happens every month too.

NE,

What if they don't have a bank acct to draft from? They all have debit cards though. Can you auto draft a debit card?

If they have a debit card, they have a bank acct. Some auto draft companies also charge a late fee in addition to mine. There is definitely a benefit to having a higher authority charging the late fee. I have very few missed payments with auto draft.

You’ve been on the site a long time Roy, you should be on auto draft a long time already.

So you’re operating as normal Plenty. Nothing wrong with that. People in our society are accustomed to auto draft payments. It’s not like Roy’s tenants are running cash to the phone company every month and running a pile of cash to the electric company every month and running into the car dealership with cash for the car payment. They are either paying with a check or a debit card over the phone. Very few with money orders. If they are doing debit card or check, you can set up auto draft. Roy might not be able to fix the ones that are in, but there’s no reason you can’t require your incoming tenants to have a checking account to draw from as part of your approval process during screening. Unless you’re looking for cash payments to hide income, which is an entirely different story.

NE,

I tried evicting a deadbeat last month and it backfired on me.

Plus, 2/3 of my tenants will pay rent tomorrow (1st Friday) with 6 days of late fees added on. I salivate over late fees.

All pay on the first or second. I got 3 checks on 1-1-22.

Thank-you RichE (IL)

You just clarified my post here in that tenants don't have a clue as to what bank is behind their debit card and not all debit cards allow auto transfers.

We are in the $$$ making business. As said a 1000's times. There ain't NO money in perfect people (aka tenants)

We get 8.00 per day starting the 2nd day. We charge 25.00 per attempted pick up-- as in you said you would be there and weren't 25.00- next trip another 25.00.

Any payments split- as in 8.00 a day and they pay half on the 7th-- is 48.00 PLUS 10% on the balance by the 15th.

If part not paid: court fee, admin fee, atty fee, late fee.

NE,

I agree 100% with auto draft. Here's the trick: I create three types of ACH payment batches:

1) 1st of the month (1 draft per month)

2) 15th of the month (1 draft per month)

3) Every Friday: Group A and Group B (4-5 drafts total, depending on # of Fridays)

Set the tenants up according to their paydays.

If they get paid on the 1st, draft on the first.

If they get paid on the 1st and the 15th, add them to the 1st and the 15th at half of monthly rate + 8% premium for convenience/being flexible.

If they get paid every other Friday, add them to whichever batch--A or B--that tracks their paydays at half the monthly rate + 3%, which works out to 11% premium annually.

This has kept me at 90%+ on time payments. For those that bounce, they must pay the following business day and include a late fee of 10% plus an autodraft bounce fee.

I used to salivate over late fees too. Now I salivate over flexible rent payment plan premiums that add 8-11% to my income for being flexible and a little extra accounting....and when those bounce on occasion I ALSO get the late fees, or as I affectionately refer to them, "S i d's Suds money".

What do I do if they don't have a bank account? Nothing. It's on my application that they MUST have a bank account (or agree to get one) and they must agree to pay by autodraft. People with pay cards can set up a checking or savings account and move the funds over.

The lease includes the information to set up the autodraft as well as the charge authorization. All done on fillable PDFs with electronic signatures.

Sid,

Your auto draft system seems to work for you but at the same time seems 'complicated'. Personally, I want all of my rents in by the 7th day of any month so I not have to chase rents in the middle of month or whenever.

Roy -

Some of the pay cards (debit cards) allow ACH debits, but many of them do not.

Some of the people who get paid on pay cards can open a bank account and do transfers that allow auto-debit, but many of them can't get a bank account due to "bank credit". Basically, if they previously had a bank account of some kind, and they bounced a bunch of debits, they likely owe the bank $$$ and can't get even a savings account until they clear up the fees owed. I've got one of those right now. He was doing just fine, had opened a bank account, was paying rent just fine on payday plan for a year, then caught COVID.

Unfortunately, he has long covid and is out of work. (We've applied for Covid funds for his rent now.)

The people with the pay cards MAY be able to use Zelle or Venmo, but may not. They may be able to pay via ACH, but may not. It all depends on the issuer of the pay card and their banking history.

I've had some of them able to use ClearNow (which is easier for me than some other options, particularlly if I'm out of town!) but some can't as their pay card won't allow ACH debits for some reason.

The majority of the US lives pay check to paycheck.

Does that concern me? Yes but I don't lose sleep over it- we are in the richest nation in the world. Our poor make more than the middle class in some countries.

Thanks Barb for that education. With each new tenant, do you have to do serious financial research in the tenant's banking (or lack of) history? How do you learn which debit cards allow auto-drafts, ACH, Clearnow , Zelle etc. etc. It is mind boggling. There does not seem to be 'one size that fits all' here.

I have a retired tenant who receives $4,000/month in retirement benefits and that money is direct deposited into his bank debit card on the 1st and 3rd day of each month. On the 3rd day, he drives to this bank and withdraws $4,000 in cash. He then drives around to all of his local utilities and pays them in cash. He even drives to my bank (WF) and makes a cash deposit to pay his rent with. At the end of the 3rd week of the month, he is flat broke. One week later, this cycle repeats itself.

And for me to learn how this one tenant pays his bills, I had to do extensive research which began with an office appointment with his banker. I went to there trying to set-up an auto-draft system but his banker said "we don't allow that". The bank manager said, "all of our customers are required to 'initiate their own money transfers' unless a family member has 'power of attorney/guardianship' over that account.

When I got started owning only single family homes, they had to pay rent on time, or else. So 20% were late.

In 1990 when I started getting into units, class "B", they too had to pay on time, again 20% would still be late.

In 1987 When I started buying "C" grade apartment in shady locations, 50% were late and the other 50% wouldn't pay at all. Eviction and upgrading the class of tenant would take around 1 year for the entire building to be converted to "B" class tenants paying on time.

Before the Pandemic, around 90% of all tenants would pay on time, the rest would pay late, with permission.

All of my tenants pay before the first. 2-7 days before the first, except for one who hand delivers a check to me every month on the first. This month he was here on the 2nd because he had been out of town and we've had deep snow conditions for the past month which slowed his drive home.

Robert J,

Roy so what's your point to Robert J? Cash only or the Porsche 911? maybe the bright yellow offends you?

All this whoopla just so you get your money on the first? Yea that's big time management-- just saying.

my formula:

$8.00 a day X's 7 days-- $56.00 +10% on $600.00 balance is $60.00 TOTAL = $106.00 X's 20 property's (out of 63) = $2,000.00 a month time 12 months? === $24,000.00 annually.

So someone please tell me why that bothers your? This is just the late-- not the rent which is then paid in cash?? most often.

Hi again Roy. I will agree my system is somewhat more complex than just having all rents in by X-Date. That said, these are what I consider the worthwhile tradeoffs:

1) 8-11% greater income from about half my rents. So for example let's say your monthly rent roll is $15,000, but if you have half of them on the bi-monthly or bi-weekly plan ($7500) then you add 8-11% on top of that ($600-$825/month or $7,200 - $9,900/year). Not to shabby!

2) You have guaranteed record of payment / payment failure. If a tenant every claims, "Your honor, I paid the rent!" All I have to do is show a copy of my bank's software printout showing "Joe Smith - 123 Anywhere Ave - Rent 1st of month - Declined to to insufficient fund." Boom!

3) The record tracking also is far easier than the old way when folks just dropped off rent. Half the time they'd forget to put their name on the deposit slip and I'd have to guess whose rent it was, which was especially a pain if it was paid short, over paid, etc.

4) As Brad 20K says, I TAKE the money. No waiting for them to decide if they want to pay me and how much. I tap their account the day they get paid, so if there's any chance at all of someone not getting paid during that payday cycle, it's the guy who waits and hopes for the tenant to pay vs. me.

New systems take time to learn and appreciate, but once you get it set up, you get comfy with it and it becomes a breeze. I spend fewer than 5 minutes per ACH batch setting up, submitting, and checking. 20-25 minutes a month for 90%+ on time rents!

Btw, one of my greatest concerns before going to ACH was "what if someone claws back rent?" Hasn't happened once yet, even with a couple whom I had to evict. Either they don't know they can attempt it, or they figure it won't work since they legitimately owed the rent. It hasn't been a problem.

Myob,

As NE said earlier,...I am just making an 'observation'. That is the best thing I have heard from NE all day. You do not need to 'read more into it' than just what it says.

I didn't read more into any of the answers. My observation is from reading here for years and all the-"GEE I NEED MY MONEY ON THE FIRST posts. OR I need to be paid on the first how do I do that? Not by running to court on the 2nd for sure. OH what can I do posts?

Why is that so awfully important? It's mentioned tenants living pay check to pay check-- how about some of you LL's.

There's potential Roy to those 2/3's of renters you mentioned for additional income. Who cares if it's not drawn down at 12:01am on the first? By auto withdrawal.

AUTO draft-- ain't no money in that either.

I just don't get the obsession of I gotta have it right now! Sorry Roy I am just making an observation also.

NE, how do you verify their enrollment in auto draft?

My company is enrolled with Clearnow. I get an email as soon as a new tenant enrolls with Clearnow. Zero effort. I don’t even talk to my bank about it or the tenants bank. If I don’t get an email by the time it is time to sign the lease and the tenant said they have enrolled, I will take 30 seconds and call Clearnow to see if they have the information. Sometimes there is a lag of several hours between enrollment and email confirmation.

Roy; to answer your question.... about 8-10%.

NE,

No correct method. Auto draft would scare the heck out of seniors. Some send MO through mail some deposit some pay cash.

Roy,

Paycheck to paycheck is normal. Payday Plan Rent takes the pressure off these folks. I believe it is arrogant on the part of the LL to demand paycheck people to conform the income to a calendar designed by Caeser in 750 BC.

Less stress on the res and the LL gets his rent.

ALL our folks are on time because we go with the flow, not fighting the current.