While cash is king, stress-free is god.
I hate checks! They are annoying and drive me mad. If I were king of this world, money transfers would ONLY occur through direct deposits, automatic drafts, transfers, or honestly my preference would be my credit card. Using a credit card is the absolute best way because everything comes in one bill.
American Express is awesome in the fact that each authorized user has their own account number. This way you know who spends what. I love it because our business has its own card, so at tax time I look at everything that was spent under that number.
The only bill I am willing to self-pay is the credit card. Everything should be automatic, preferably on a credit card otherwise bank draft.
Why I Choose to Collect Rent Through Direct Deposit
Like I said before, I hate checks. Dealing with checks increases the ability for them to get forgotten by the sender, lost in the mail by the USPS, or forgotten to be cashed. In my opinion, they are as out-dated as records were for us 20-somethings and CDs are for the newest generations.
Therefore, when I first got started, I decided that I was not going to do checks. It was one thing for the security deposit or if something went wrong, but that was not going to be status quo. I didn’t want to deal with them getting lost, forgotten, bounced, etc.
From the very beginning everything has been direct deposit. On receipt of the lease I provide a routing number and account number. I provide tenants with the warning that they need to set it up 4-5 days early as it can take a few days to process. So far so good! It has been easy, amazing, and stress free. It is to the point that I am starting to require it for the security deposit too!
While I am sure there will be negatives at some point, and don’t worry I will most definitely write about it, at this point, direct deposit is my number one way to do it.
PS- If your tenants bank won’t direct deposit into your account. Check out Cozy. For no cost to you the landlord, cozy will act as the go between.
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Should I be concerned with giving out my account number and routing number to a tenant?
Your account number and routing number is found on any checks. Therefore I haven’t had an issue providing this information. The only downside is in some states if partial payment is receive it can restart the eviction process. This is small enough concern that it has not stopped me from investing.
One thing I have done to mitigate my risk has been to create a general account. Therefore I keep a $500 or so buffer in my rental account and transfer the extra into the general account that no tenant has access to.
Good post however I was wanting to know if you could write a litte more on this subject? I’d be very thankful if you could elaborate a little bit more. Many thanks!
Bridget, Glad you liked it! I have a lot more article along these lines in the pipeline. So definitely keep checking in!
Elizabeth
Does it cost the tenant to deposit into your account? Like if they do it online? Trying to get my direct deposit set up right now 😉
Nope it is free of charge! It is why I love it 🙂
You may already know about this but do you know that AD military get all annual fees waived for AMEX as well as Chase and Barclays credit card? This includes Amex Platinum – the $450/yr travel bonus card with lounge membership!
Another question – do you incentivize direct deposit (or decentivize?) for instance, do you offer a discount on rent if they pay via direct deposit or charge a fee if they choose to pay with check? Any thoughts on those routes?
I didn’t realize about Barclays but I did for AMEX . AMEX also offers 0% for the life of your service, which is pretty cool.
I require direct deposit as part of my lease. In my mind it is non-negotiable therefore I don’t incentivize it, I simply require it. I have not had an issue with just requiring it without an discounts.
My bank said that money transferred to me from a personal account using the routing and account number is a wire transfer and would cost me incoming wire transfer fee. The bank also recommended a check for the paper trail/visibility issue. This does not sound correct to me. Is this so?
I use Navy Federal and Wellsfargo and have never had an issue. It is not consider a wire transfer but the same as a check. I have seen one instance where a local credit union does not do bank to bank so she has to do paypal. I would definitely call back and investigate some more. I have found that I sometimes receive different answers depending on who I speak too.
What are your thought on using cozy.co to collect payment? Thanks for turning me on to them! It is making my first time land lording and getting renters applied and background/credit checked a breeze and I look like I know what I am doing to prospective tenants which is feel is important! 🙂
I absolutely LOVE cozy!! Huge fan and they make things so easy!
Hi I love your post!
Are you you still posting?
How do you still like Cozy? I’ve thought about it but I see some not so good reviews.
Thank you for a first time landlord!