Having been a landlord since
early part of 1994, I feel fairly safe in stating I've tried almost every imaginable way of collecting monthly payments from my residents. I want to run through some of these methods and let you in on pros and cons of each technique. I'll wrap it up by telling you what I do now.Personal Collections Scheduling appointments to pick up payments was never even a consideration for me as a standard way of doing business. I'm too lazy and I consider it resident's responsibility to pay me if they want to stay. The advantage is that you know right away who's paid and who hasn't. You still don't know if check will clear with good funds, assuming you weren't paid in cash or certified funds.
Of course, I've met with residents to pick up payments on special occasions when resident was late or trying to avoid late fees. Again, this is a waste of time in my opinion.
I now have a designated place for residents to drop off payments if they want to go this route. Also, for chronic late payers, they lose privilege of paying any other way than by certified funds at drop box. Once they've paid consistently and timely for six months, I'll consider reverting back to standard pay system I'll discuss later.
If you do decide to meet your residents to collect, I highly recommend NOT meeting at your personal residence. Do not allow any of your residents to know where you live. In fact, my opinion is that you should have an unlisted telephone number for your home line and that you should spend as much time as necessary removing personal information from various internet directories. Sorry for tangent here, but I thought it important enough to include.
I don't recommend this method as it requires too much effort on your part.
The Check's in Mail This is probably way everyone starts out. The payment doesn't arrive and resident claims it's in mail. If it arrives, is it even good? Who knows? The advantages to this method are that it's very common, and if you have a great tenant, it can be a low hassle way to collect payments.
The disadvantages include reliance on resident's memory to write check, correctly address envelope, place correct postage on it , and actually drop payment in mail. Additionally, you then rely on postal service to deliver payment to correct address and in a timely manner.
I've even gone as far as providing payment coupons and self-addressed stamped envelopes to residents to remove some of risk associated with this methodology. I didn't find this added effort to produce any noticeable difference in results.
I don't recommend this method as it requires too much Involvement from your resident.
Resident Makes Deposit I realize many of you will completely balk at this idea, but I've tried it for years now with some success. Prior to having a drop box location, I would give my late payers a bank account number to which they could deposit monthly payment directly.
Naturally, I graduated from that step to providing deposit slips that were pre-printed so account name and account number wouldn't be inaccurate. In this case, this added effort did reduce monthly "I don't have such and such information" telephone calls from residents. I was never that concerned about a resident attempting to make a withdrawal from my account, although I'm sure that's a possibility. To decrease this risk, you could have a separate bank account for deposits and sweep funds into another account periodically.
Another consideration here is that potentially you could run into a failed eviction for accepting partial payments. Whether or not a judge would consider a tenant making a small deposit in a last ditch effort to avoid eviction "constructive receipt", I'm not able to answer. So far, (knock on wood), none of folks I've evicted have tried this angle.
However, what will invariably happen is that residents WILL make partial payments. The truck broke down, child custody legal fees, etc. get prioritized over shelter and what few remaining funds there are end up in your account. Then you're left with fun job of trying to determine who paid what.
