Collecting rent is one of your least favorite things to do as a landlord. Sure, you like the money, but you don’t much care for the process of getting it. You have to talk to tenants who claim that the “check is in the mail,” even though you know they never sent it, and some of your tenants seem to be allergic to answering the phone when rent is due.
That’s just the tip of the iceberg of what can happen during the rent collection process, though. Check out some of the biggest horror stories out there, and then learn the solution to your rent collection problems.
Bounced Checks and a Squatter
If you deal with paper checks, you are likely going to come across a bounced check or two. This is always annoying, but for “Janet” (name changed to protect anonymity), it was a real nightmare .
A property manager, Janet was under a lot of pressure to rent a condo in Dupont Circle quickly. She needed to get a signed lease and the deposit before the owner left the country.
Instead of doing a thorough screening, she went the express route, allowing the potential tenant to submit his credit report to her. She approved him, and he wrote out the checks for the security deposit and the first month’s rent. He received the keys and moved in.
The moving trucks barely had time to pull away from the condo before the checks bounced.
Janet contacted the tenant, who was very apologetic and wrote her two new checks, this time for a different account.
Guess what happened to those checks?
Janet had enough at this point, so she met with the manager at the bank. The manager told her that the tenant had four bank accounts at that bank, and each one contained less than 10 cents. It was obvious that the tenant was running a scam with the help of paper checks.
The tenant stayed in the condo for two months, waiting for Janet to make her way through the court system. When the court date finally arrived, he fled and she never found him again. That was the least of her worries. The condo owner lost faith and cut ties with her.
The Stop Payment Nightmare
A tenant can write you a check and have the money in the bank to cover it, but that doesn’t mean that the payment is a done deal. This story shared by Nashville attorney Robert Hill illustrates that point.
According to Hill, a resident decided to leave a rental property in the middle of his lease. He didn’t just leave, though. He put a stop payment on his last rental check. The landlord ended up having to take the tenant to court to get the money, and he received a default judgment. A garnishment wasn’t possible, though, because the tenant was unemployed. The tenant ended up filing for bankruptcy, which wiped out the judgment. Then, he moved away.
The judgment might have been wiped out, but the tenant had broken the law, so the landlord filed federal charges. The landlord invested years into trying to bring the tenant to justice, and there’s no telling how much stress he had to deal with, all because the tenant had stopped payment on a check.
Stolen Rent Checks
If you manage a large apartment complex, you probably don’t have the time to pick up everyone’s check individually. There is a good chance that you use a rent drop box. Tenants just go over to the box, drop their rent checks in, and go about their day.
It sounds like a great idea, but the management team and tenants at Brookstone at the Foothills apartment complex in Phoenix, Arizona, would beg to differ.
The tenants deposited their checks one month like normal, but those payments never made it to the management team. Instead, someone broke into the box and stole them. The thief cashed the checks, and it turned into a battle over responsibility. The tenants state that the management company is responsible for the lost money, while the management company thinks the tenants should have to pay again.
This sounds like a real headache, but it could have been avoided. Actually, all of these problems could be avoided by going with an online payment system.
Online Rent Collection – The Solution to Your Rent Problems
An online rent collection system like the one offered by VerticalRent makes rent collection a breeze. You can avoid becoming the victim of a horror story when you use one of these systems.
Check out some of the benefits that come with online rent collection.
No More Bounced Checks
When you use an online payment system, your tenants pay by ACH/eCheck or a credit card/debit card. You will immediately receive authorization, so you don’t have to worry about payments bouncing. That means you won’t end up living through the nightmare that Janet did.
Tenants Can’t Stop Payments on a Whim
Since online systems are instant, your tenant can’t go behind your back and stop the payment. Instead, he or she would have to take it up with the financial institution. This layer of protection is critical.
Online payments are secure. They are encrypted and protected, and you don’t have to worry about someone coming by and stealing the money.
Accounting can be difficult, but it’s a cinch with online payments. Not only can tenants see how much they owe at any given time, but you can also log into the system and view the tenant’s payment history.
Improves the Tenant-Landlord Relationship
You want to have a good relationship with your tenants, and that can be muddled if you are constantly collecting payments from them. You can keep your relationship positive by going with an automated payment system online.
Times are changing, and paper checks are on their way out. Stay with the changing times by switching to an online payment system.
Published by your friends at VerticalRent