Hi All,
Sorry if this is a duplicate/answered post. How do you all collect rents? Seems like most are still doing it in person. If you have multiple properties, are you really going around to 10-12 different houses? Anyone taking mail via PO Box? (i know… they won’t mail them in on time…) just wondered.
CC
I give them pre-addressed envelopes. I give them one envelope for each month that the lease is for…some landlords actually put the postage on for them. Many landlords use a P.O. Box…
I have great tenants, I always get my rent on-time…I have never (knock on wood) had a late payment.
Keith
I collect all the rents in-person every month. I have several dozen rentals and go to each one each month. All of my rents are due by 5pm on the 4th, so I spend the first four days of each month collecting rents. I collect the rent in-person for several reasons:
It is harder for the tenant to not pay you when they know you will arrive in-person. (it’s much easier to simply not mail the check)
Most importantly, I inspect (walk thru) every rental every month. This allows me to see the condition of the rentals and keeps pressure on the tenants to take care of them.
Collecting the rents in-person gives you the reputation for being a hands-on landlord, which lessens the troubles that you have with tenants. They know you’ll be around, so they do fewer stupid things that you’ll find out about. By being hands-on, I also often meet the neighbors and get calls from them when things are going wrong. In fact, I always give the neighbors a business card and invite them to call when there is a problem and when they have a friend that needs a place to live (a little free advertising).
Collecting the rents in-person is optional if you have nice, single family houses. However, I believe that it is just about mandatory if you have low-income rentals.
Mike
I have my tenants mail me the rent. Rent is due by no later than 5pm on the 3rd of each month. I haven’t had a tenant yet that didn’t mail me the check on time (knock on wood). The closest I had was this month (Jan/06), and I got it in the mail on the 3rd due to the holidays.
I have a suggestion. Prior to becoming involved with trusts this worked very well. You might set the tenant’s rent at $800 for example, but allow them a discounted rent (maybe $750) if the rent is in your hands by the 1st. Never had a late payment.
My properties now are placed in a land trust and I don’t collect the rent. My tenants mail the rent to the Trustee, who pays the mortgage and sends me a check for my cash flow. Maintenance and repairs are the tenant’s responsibility so that does not apply.
What is a land trust???
I read about NARS trusts. I don’t get it. How does that get the rent paid and bring in income? From my understanding, you don’t get any money until the trust is expired . . . right?
Mtnwizard, where does the trustee get the money to manage the property if you are not sending money in? What if your tenants don’t pay?
Here is the process:
IN THE BEGINNING
A (title-holding) land trust is created in the name of the current owner (the settlor, Joe Jones) who holds a 100% beneficiary interest. No one else is involved, only the owner and his/her trustee.
Escrow is opened to facilitate the assignment, in the existing land trust, of beneficiary interest to co-Beneficiary (the Investor).
A Beneficiary Agreement is created between beneficiaries wherein the property’s Mutually Agreed Value (MAV) is established in order to determine settlor beneficiary’s beginning Beneficiary Contribution (equity and/or any non-recurring closing costs, etc.). This documentation also reflects all co-beneficiary contributions (equity contribution and/or non-recurring costs).
A Possession and Occupancy Agreement (triple net lease) is executed between the trust and the 2nd co-beneficiary (Reggie Bush) and responsibility for collections and disbursement are then assigned to PAC Management, a note servicing company).
The Tenant pays his monthly lease payment to the Trustee who has title to the Property as the Owner. The Trustee pays the mortgage payment and sends me my monthly cash flow check. If payment is late, the Trustee sends notice to the tenant with a copy to me.
If the Tenant catches up, no problem. If he/she misses a payment, we have two months of lease payments in a contingency fund so no mortgage payment is missed. If an eviction is necessary it can be carried out and the tenant replaced by another Resident Beneficiary. These are rare because tenants in a NARS Land Trust have the same benefits as homeownership and don’t want to blow it. In some cases (depending upon how you want to structure your trust) tenants share in future appreciation so they usually act like homeowners.
AT THE END OF THE LEASE TERM
The property is either sold by the trustee at FMV, or purchased and refinanced by co-beneficiary at FMV.
All loans are retired (out of the proceeds of the sale or refi).
Costs of disposition are paid (e.g., escrow, re commissions, etc.).
The settlor beneficiary then is refunded its beneficiary contribution (beginning equity and non-recurring startup costs).
The co-beneficiaries are refunded their beneficiary contributions (non-recurring startup costs, equity contributions, escrow fees, any part of commissions paid at inception, etc.)
ALL remaining (net) proceeds are distributed among beneficiaries in proportion to their respective percentage of interest held.
Land Trusts tend to scare people because they are unfamiliar with them. Many realtors and attorneys don’t know anything about them. The Trust Document itself is only 7 pages and very easy to understand. I hope this answers some of your questions. Read as much as possible and feel free to email me anytime you have any questions. I’ll be happy to help.
Hi Real New,
As a property manager with several hundred units from which to collect rents, we use either a resident manager on larger properties to collect rents, or if no resident manager, the tenants mail them to our office, in their own envelopes, with their own postage, on time. If not paid on time, they are served with a notice to pay which includes a late fee and a notice fee.
Most of our tenants pay on time and the ones who receive any notice to pay learn very quickly, via an $85 dollar expense, not to do it again.
We are not babysitters, we are not ‘mentors’ . . . this is a business and the tenants learn through enforcement of their obligation and us performing our obligations as landlord, how to be responsible for their own rent payments.
I also visit my properties more often than once a month and when the tenants are there I talk to them about something other than money they owe . . . i.e., what’s going on at the property in my absence. They are our best source of what’s happening. And they know we appreciate their information. This does wonders for the landlord-tenant relationship.
Hope this helps!
Cate