Whether you are managing your rental property yourself, or using our property management services, this information will be helpful.
Create a separate bank account for your income properties.
If you have more than one property, it's recommended that you get a separate account that is associated with your LLC or corporation if you have one. Not only does it make your bookkeeping cleaner, but it will offer you more protection in the event of fraud or lawsuits.
Create an account with PaySimple to receive funds.
It costs nothing to sign up and eCheck transactions cost only 55 cents. There is a monthly fee, but this is very cost effective for investors who own multiple properties. Setting it up is quick and you will have to submit some financial information. After about 3 days, your tenants can send you money directly from their bank account to your bank account. They can also pay with a credit card (this costs you more). Limestone Investments uses this method exclusively so if you are our client, go ahead and set this up now. When your tenants pay, you get an email. If you have multiple properties, you will immediately see the benefits. Sign up with PaySimple here.
If your tenants pay cash - typical of low income housing - give your tenant bank deposit slips.
If you own multi-family units or houses that are on the low end of prices, give your tenant pre-printed deposit slips with the name of the property on the slip. You can then instruct them to keep them handy so they can deposit cash directly into your account AND you will know where it's coming from. Don't worry about fraud as you have already set up a separate account and you will be sweeping money from this account on a regular basis.
Don't freak out when the rent is late.
If you get a tenant who pays on time in Las Vegas, consider yourself lucky. Las Vegas is full of irresponsible tenants so if you get one that pays late, consider it normal. However, it doesn't mean they shouldn't feel pain. Generally, you will escalate the level of pain as the frequency continues or gets worse. For example, the first time a tenant is late, we email or call them with a reminder. The second time we spank them with a $50 late fee. The third time with a $100 late fee and a five-day notice... You need to let them know that the pain will get worse every time. If they don't want to suffer the pain, they will either leave or pay on time.
DO NOT CALL YOUR TENANTS after the first late payment.
You don't want them to develop a habit of telling you a Country Western song every time they are late. When they call you with their song, don't argue, yell or tell them you don't care. After they have exhausted their story ask them "So when are you going to make a payment?" You write that date down along with the amount and then say, "That's fine, you will have to be make an additional late payment of $____. Are you ok with that?" If they don't agree with paying the late fee then simply say. "I'm sorry this didn't work out. If you leave gracefully in the next week, we won't have to make an ugly scene with the constable."
DO NOT TAKE LATE PAYMENTS PERSONALLY.
They are paying late because they have habits you don't have. The lack of money in their pockets doesn't mean they disrespect you. It means they never learned to save for a rainy day or how to develop a habit of building wealth. They are renters because they have bad habits. They don't think like you do. Just imagine having a 12 year old renting your house and you will get a mental picture of what you are up against. You own property because you have good wealth building habits. It is nothing personal. Let it go.
Leave evictions to a professional.
We charge $300 to evict your tenant unless you are our customer. We do evictions with grace and respect. We see investors lose thousands of dollars in damage and opportunity cost because they lost control of the situation. We evict tenants on a weekly basis with compassion and usually we get the property back in excellent condition. Unless you have done numerous evictions, you are likely to get your clock cleaned.
How do I receive payments?
The majority of our business is handled through Chase bank. If you have a single family property, we generally pay within 5 days of receiving money. If you have a multi family property, we settle your account on the 3rd week of each month.
Do I have to receive money electronically?
We can mail out checks for $5 per check. It's a serious pain in the neck and a waste of precious natural resources.
What if my tenants don't pay on time?
If your tenant is more than 4 days late, we can post a 5 day notice on the door for you. Depending on the type of property management you have chosen, this is free. Worst case is $75 for this service.