Having tenets directly deposit rent?

Rehabbing, Fix and Flip, Rental Properties
21

It depends.

Personal accounts: checking account deposits are free (i think)
Business accounts checking account deposits are $5.00 flat fee, credit cards approximately $30 on $1,000. I know it isn’t cheap, but it removes a lot of excuses and it is convenient for me.

22

is there a charge for a person just directly sending a payment to you via Paypal, without using a credit card but cash in their own account?

23

The dispute is not always if you authorized the purchase or not. It could be fraud, like that you provided them an inferior product. This could be that the property is not painted, or the kitchen faucet drips or even that the agrass grows too fast. I don’t want Visa or American Express in my business like that.

24

That is very true. I would encourage anyone to research the chargeback rules for VISA, AMEX, etc. before they blindly go into this. I have other businesses that have experienced multiple consumer fraud cases where products were legitimately shipped to customers, accepted and acknowledged (even with signatures) but still the customer was able to get their money back in full months later by manipulating the credit card fraud rules.

This is not for the fainthearted. If you are not completely aware of the laws, no paper trail will protect you. I’ll give you one example:

  1. Customer purchased $2K worth of product from one of my businesses on VISA.
  2. AVS on their address matched and customer’s order was processed.
  3. Product Fed Ex’d to the customer with signature
  4. Customer acknowledges receipt, uses product, and even emails with questions for support, etc.
  5. 3 months later, customer decides they no longer want to use the product and files a chargeback with their bank

We get the chargeback and provide the bank all the paperwork, audit trails, copies of signature on Fed Ex document, and emails showing the customer has received and is using the product. Customer’s claim was that they never received the product (fraudulent).

Visa processing come back to us and deny our dispute because (apparently) it was the customer’s wife who signed for the product receipt, not the customer who’s name was on the billing address of the order, even though we shipped the product to the billing address (per their regulations).

So this is the level of scrutiny that you have to abide by. I’ve lost about $10,000 in money to chargebacks over the years, which thankfully is a minor percentage of the turnover that the business makes. But if I had, say 10 rental properties, and I had one tenant who disputed 6 months worth of rent on some fraudulent chargeback, I’d have no protection based on physical product shipment, etc. This is where the lack of precedents means that due to the insurance policies of the merchant providers, its just easier for them to accept the dispute and take the money from the vendor (ie. the landlord).

I’m not saying that there aren’t legitimate ways to do this for rental properties. I’m just not sure that there are any standards documented for the procedures to follow, and PayPal definitely won’t help if the dispute is to the credit card used to pay PayPal, as its out of their hands.

If you know of documented standards and practices for rents using any form of electronic commerce, I’d love to get a URL from you as to where to find them.

V

25

so did you receive the product back in satisfactory condition?

26

No, it was computer software. Once it was delivered with a serial no, it was lost forever.

V