Having a renter deposit rent directly at bank?

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southwest_stacker
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Having a renter deposit rent directly at bank?

Post by southwest_stacker »

We have two rent houses and both renters pay us every month in cash. They don't have bank accounts. We live about 10 miles from one and 30 miles from the other. Every month we have to meet up with them somewhere to get the rent. It is kind of a hassle. Interestingly enough both of them live right by branches of our bank. One literally in walking distance and the other a few blocks away.

I was thinking of giving them deposit slips and telling them to just deposit the rent each month. It seems like it would be a lot less hassle for everyone involved and they would get receipts from the bank.

The account the rent goes into always has a very low balance. Every month after we deposit the rent the money is swept out to other accounts.

It kind of seems scary in that we would be giving them our bank account number but then again everyone you write a check to gets you bank account number.

Good idea or bad idea?
arthurb999
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Re: Having a renter deposit rent directly at bank?

Post by arthurb999 »

Can't they just have their bank accounts auto send you a check every month?
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deanbrew
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Re: Having a renter deposit rent directly at bank?

Post by deanbrew »

arthurb999 wrote:Can't they just have their bank accounts auto send you a check every month?
Read the second sentence of the original post.


Seems to me that would work if the tenants really do deposit the rent. I don't see how they would be able to withdraw any money from your account, which I'm sure is a concern. Now, whether they really go to the bank on time is another issue.
Last edited by deanbrew on Tue May 07, 2013 12:31 pm, edited 1 time in total.
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ieee488
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Re: Having a renter deposit rent directly at bank?

Post by ieee488 »

arthurb999 wrote:Can't they just have their bank accounts auto send you a check every month?
I think you missed the part where the OP wrote that the tenants don't have bank accounts.

I wouldn't give them deposit slips.
Meet them at a bank central to the two locations.
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Bert
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Re: Having a renter deposit rent directly at bank?

Post by Bert »

I have had a tenant deposit the rent into my bank account. The condo I was renting was 1300 miles away from my home, and the tenant would go to a nearby bank where I had an account, on their lunch hour, and pay the rent. She would text me when she made the deposit and I would verify it on line. It worked fine.
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TomatoTomahto
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Re: Having a renter deposit rent directly at bank?

Post by TomatoTomahto »

You give the same bank account information to everyone you write a check to. Presumably, if one of them moved out and left the rental in good condition, you'd give them their security deposit back in the form of a check.

I would do it; meeting up for a physical exchange (cash for receipt) is very old school.
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southwest_stacker
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Re: Having a renter deposit rent directly at bank?

Post by southwest_stacker »

ieee488 wrote:
arthurb999 wrote:Can't they just have their bank accounts auto send you a check every month?
I think you missed the part where the OP wrote that the tenants don't have bank accounts.

I wouldn't give them deposit slips.
Meet them at a bank central to the two locations.

The meeting them is the hard part. Between their work schedules, our work schedules, the fact we travel a lot, and that there are two separate renters we have to meet every month it is a hassle.

This month for example they were both calling to meet us on the first but we were out of town so we just met and got the rent yesterday.
expat
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Re: Having a renter deposit rent directly at bank?

Post by expat »

It kind of seems scary in that we would be giving them our bank account number
In Europe, landlords insist on being paid directly to their bank account and give their account out freely. In America, it is considered "scary". I don't know why.
Nummerkins
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Re: Having a renter deposit rent directly at bank?

Post by Nummerkins »

Give them your account number (it's not a secret) and have them deposit it directly.
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NoVa Lurker
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Re: Having a renter deposit rent directly at bank?

Post by NoVa Lurker »

I see no problem with having them deposit it directly at the bank.

However, if you want to stick with an old school method, telling them to mail the rent also works! That's what I used to do when I rented. It's a lot better than trying to meet up.
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TomatoTomahto
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Re: Having a renter deposit rent directly at bank?

Post by TomatoTomahto »

NoVa Lurker wrote:I see no problem with having them deposit it directly at the bank.

However, if you want to stick with an old school method, telling them to mail the rent also works! That's what I used to do when I rented. It's a lot better than trying to meet up.
Then they would have to get a money order, which isn't free, or mail the rent via registered mail which is also not free. It [stinks --admin LadyGeek] not to have a bank account.
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retiredjg
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Re: Having a renter deposit rent directly at bank?

Post by retiredjg »

I have a friend who does this. Her renters don't have a bank account either. She did not mention giving them deposit slips. She did mention a code they use at an branch a block from their house - I'm not sure if it is an ATM or night deposit slot. Not sure how they can put money in and can't take it out, but that seems to be the case. She is happy with the arrangement.
Calm Man
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Re: Having a renter deposit rent directly at bank?

Post by Calm Man »

It sounds like you collect the rent the way I used to meet up on Monday nights before Monday Night Football with my illegal bookmaker in my young adult years !!! Anyway, if they are willing, I would have them deposit into my bank account, although they won't be getting a receipt from you directly, if that makes them nervous. I am glad the tenants are working out well as if I were in the rental real estate business (which I am not) I would probably exclude anybody without a bank account.
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TomatoTomahto
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Re: Having a renter deposit rent directly at bank?

Post by TomatoTomahto »

Calm Man wrote:It sounds like you collect the rent the way I used to meet up on Monday nights before Monday Night Football with my illegal bookmaker in my young adult years !!! Anyway, if they are willing, I would have them deposit into my bank account, although they won't be getting a receipt from you directly, if that makes them nervous. I am glad the tenants are working out well as if I were in the rental real estate business (which I am not) I would probably exclude anybody without a bank account.
They wouldn't get a receipt from the landlord, but they would get a receipt from the bank, which presumably carries even more weight should it ever be needed.

EDITED TO ADD: In reverse, that's one reason I use my bank's Bill Pay service. Proof from a disinterested third party about payment.
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arthurb999
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Re: Having a renter deposit rent directly at bank?

Post by arthurb999 »

"They don't have bank accounts"

That's scary...
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TomatoTomahto
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Re: Having a renter deposit rent directly at bank?

Post by TomatoTomahto »

From

http://www.newsmax.com/US/bank-account- ... /id/500720

About 8 percent of American households don't have a bank account.
I get the FI part but not the RE part of FIRE.
retiredjg
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Re: Having a renter deposit rent directly at bank?

Post by retiredjg »

TomatoTomahto wrote:About 8 percent of American households don't have a bank account.
And I bet that 7.99% rent rather than own.
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asnigro
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Re: Having a renter deposit rent directly at bank?

Post by asnigro »

I would think giving someone access to your primary bank account (and/or routing number which is available at the bank) could open you up to problems.

What I was thinking about doing was opening an extra savings account just for rental income deposits at the same bank as my primary checking/savings. This way the renter makes their deposits and I would just transfer the money from the rental account to my primary hours after the deposit.

This is a lot of work for both parties compared to the method of Paypal (no fees for bank tranfers) that I settled on. Gotta get a bank account.
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Re: Having a renter deposit rent directly at bank?

Post by expat »

I would think giving someone access to your primary bank account (and/or routing number which is available at the bank) could open you up to problems.
Every time you write a check you give someone your bank account and routing numbers.

Why is it acceptable to give your primary bank account and routing number when paying but not when being paid?
Last edited by expat on Tue May 07, 2013 2:57 pm, edited 1 time in total.
bogglehead
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Re: Having a renter deposit rent directly at bank?

Post by bogglehead »

My LL did this and it worked out fine for the three years I lived there. He would give me 12 deposit slips when I renewed my lease and I just dropped the money in the bank on the 1st. I had a checking account but never did figure out how to "push" it from my bank to his, so I just dropped off a check. Was easy enough and everyone was happy.
rkhusky
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Re: Having a renter deposit rent directly at bank?

Post by rkhusky »

I have heard of people setting up bank accounts for charitable donations. They publicize the bank account numbers.
lawman3966
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Re: Having a renter deposit rent directly at bank?

Post by lawman3966 »

I rented a condo from a couple that lived in China. Before they left for China, they verified with their bank that it would be ok for me to drop by the bank and pay my rent each month.

I did that regularly for years. In my case, I deposited a check into their account. However, I see no reason why cash would not work.

Later on, to save time, I started mailing the deposits to their bank, which also worked. It sounds like your tenants can't use my second method.

As an aside, as I recall, I needed their account number, but not the routing number. Again, I'm not a banking expert, but I don't see why anyone would need a routing number to deposit cash, in person, at a bank.
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deanbrew
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Re: Having a renter deposit rent directly at bank?

Post by deanbrew »

lawman3966 wrote: As an aside, as I recall, I needed their account number, but not the routing number. Again, I'm not a banking expert, but I don't see why anyone would need a routing number to deposit cash, in person, at a bank.
You don't need the routing number. The routing number is not on a deposit slip. I see no problem with the tenants depositing cash this way each month... so long as they actually get to the bank.
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jeff1949
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Re: Having a renter deposit rent directly at bank?

Post by jeff1949 »

I've been doing just that for years with three different renters and never had a problem. I think it is a great idea. :happy
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Abe
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Re: Having a renter deposit rent directly at bank?

Post by Abe »

I have some rental properties that are about 30 miles away as yours are. Most of these tenants mail me a check or money order. I usually send them a few envelopes with my address on them for their convenience. Although I have not tried it, I would not have any problem with them depositing the money in my bank account. I would not meet them every month for two reasons. 1) It takes too much time. 2) Every time I talk to a tenant they want to talk about things that need to be done to the house.
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Leesbro63
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Re: Having a renter deposit rent directly at bank?

Post by Leesbro63 »

Here's a suggestion: Open a SECOND account at your regular bank for the rent deposit. Having the tenant deposit is fine, and probably fine even to deposit into your primary account. But if you open a second account, you can set up online banking where you can click the money into your main account at your will. The tenant will only see "their" account that you keep $10 at all times except when they deposit the rent.
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Re: Having a renter deposit rent directly at bank?

Post by dm200 »

TomatoTomahto wrote:From

http://www.newsmax.com/US/bank-account- ... /id/500720

About 8 percent of American households don't have a bank account.
Actually, I would have thought the number was higher than that.
kanvused
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Re: Having a renter deposit rent directly at bank?

Post by kanvused »

Renters actually recently requested this deposit method. Here, a receipt is necessary for cash rent payments, so I just explicitly added in the lease that the bank account information was disclosed and that the deposit receipt is their payment receipt.
ginyah
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Re: Having a renter deposit rent directly at bank?

Post by ginyah »

I have learned that people who don't have bank accounts often have a history of trouble with money. My old tenants didn't have a bank account and sent me the rent via money order. Everything was good until they stopped paying rent. I had to evict them and found that they had done thousands of dollars of damage to my house. Of course, they didn't have any money (at least where I could find it) and so I had to eat all the costs. I got a judgement against them but so had several other people and none of us collected a thing. I think it may be worth the effort to collect the rent in person each month. You know whether they paid immediately and they know you are willing to chase them for the money. Just my opinion.
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Abe
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Re: Having a renter deposit rent directly at bank?

Post by Abe »

ginyah wrote:I have learned that people who don't have bank accounts often have a history of trouble with money. My old tenants didn't have a bank account and sent me the rent via money order. Everything was good until they stopped paying rent. I had to evict them and found that they had done thousands of dollars of damage to my house. Of course, they didn't have any money (at least where I could find it) and so I had to eat all the costs. I got a judgement against them but so had several other people and none of us collected a thing. I think it may be worth the effort to collect the rent in person each month. You know whether they paid immediately and they know you are willing to chase them for the money. Just my opinion.
I have owned rental property for a long time and I agree with most of what you say except the part about chasing tenants. Deadbeat tenants know how to avoid the landlord. They don't answer the phone; they do not return calls; they do not come to the door. All of this is very frustrating, not to mention time consuming. You have to train tenants. I tell tenants that if I do not receive the rent by the due date, they can expect a visit from a sheriffs deputy serving them an eviction. I tell them I will not waste my time chasing them down. I also tell them that if they call me and they have a reasonable excuse as to why they can't pay by the due date, I will try to work with them, but I make sure they understand there is a limit to that. Where I live, it cost $50.00 to serve the eviction. After the eviction is served, they either pay the rent or they move. When tenants don't pay by the due date and they don't call, they are putting the problem on you, the landlord. When you serve them an eviction, you are putting the problem on them. They either have to pay or move.
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PacNorWest
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Re: Having a renter deposit rent directly at bank?

Post by PacNorWest »

Leesbro63 wrote:Here's a suggestion: Open a SECOND account at your regular bank for the rent deposit. Having the tenant deposit is fine, and probably fine even to deposit into your primary account. But if you open a second account, you can set up online banking where you can click the money into your main account at your will. The tenant will only see "their" account that you keep $10 at all times except when they deposit the rent.
This is precisely how it's done.
You open a checking account with your bank; a checking account specifically for rent deposits.
(Our bank has a minimum of $100.00 balance requirement in order to keep a "free" checking account.)

Use that 2nd checking account into which your tenants make the rent deposit.
You then transfer the rent deposit from that account into your personal checking/savings.

It's nice to see the deposit made on the day it's due.
Lilly
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Re: Having a renter deposit rent directly at bank?

Post by Lilly »

Our renters deposit rent for 3 months each year while we winter in Florida. Have never had a problem. We can check our account on-line to see what's going on.

Best wishes,
Lily
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Re: Having a renter deposit rent directly at bank?

Post by Bulldawg »

I've collected rent using different methods : old school meet up for the cash/check, mailed checks, direct deposit into my account; I' seem to have settled on the old school meet up as it gives me a chance to put my eyeballs on the property once a month. I find that this disciplne forces me to inspect the properties inside/out and keep small issues from becoming bigger problems. I do live close by so YMMV.
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