My tenant manager collects rents. Because I am out of state, should I have him overnight checks to me, or should I just have him deposit them with my deposit slip. He will be able to see my account number?
Thanks, Jag
I got an out of state rental where my sister acts as the property manager. I opened a local account to deposit the rent checks, and pay the mortgage and other expenses from it.
She has the deposit slips, so she knows the account number. I would do it the same way with a tenant manager except I would do a more thorough background check on him or her.
Because she’s my sister, she can also sign the checks and pay people locally.
The advantage of this over overnighting the checks to you are the checks would clear a lot faster compared to receiving out of state checks, where a hold can be a few days, and and I would know much sooner if a rent check bounces.
One advantage of using a “licensed property manager” is that they’re bonded and can lose they license of they abscond with the rent money. But if you plan to hold rentals over the years, and keep the minimum in the account, you might be ahead even if the guy ran off with a month’s rent receipts.
But you’ll have to keep a close watch on the account.
Frank,
I’m not sure that I would feel much better that the manager lost his license if he stole an entire month’s rent receipts. Having uncle Guido hunt him down might make me feel a little better. Losing an entire month’s worth of rent receipts would destroy a lot of businesses. (The vast majority of new landlords go out of business without ever losing a month’s worth of receipts). More reason to keep significant cash reserves.
Mike
Mike:
That’s one of the many decsions that has to be made in employing people to do work for you, unless you plan to do everything yourself.
To do it right, you’ll probably have to put the “tenant/mamanger” on the books for a nominal amount, above and beyond the free rent, and then buy the necessary insurance, workman’s comp, liability etc.
You should have the guy background checked, bonded, and then have liabilty insurance. For instance, I have employees for my business, and the insurance even covers situations where they get robbed on the way to the bank or back.
And one employee was robbed on the way out of the bank in the parking lot bringing several hundred dollars back for change. Fortunately, the robbers were stupid, as she had several thousand on the way in to make the deposit.
I also have to make the same decsion regarding service contracts for appliances. I could buy it for all, or cover out of pocket for all. Long and short of it, by the time I pay $30.00/year per appliance, I could buy several new ones every year and have money left over.
So for me, it’s either buy insurance, service contracts. or figure what’s the worst that can happen.
Franl
I bank at Washington Mutual. They have what is called a business deposit card. It looks like a debit card without the Visa logo. They can deposit cheks into any WaMu ATM machine. It allows them to make deposits but they can’t withdraw funds, check balances or anything. It is intended for situations just like this. They make depositis directly to my deposit bank account (which is different from my general business account) and I can watch the deposit activity from my desk at work or home. I can see when the checks clear and if they bounce they only muck up that deposit account and not my general business account. When the checks clear (usually 2 to 3 days) I transfer the funds to my general account.
It’s probably best to just have him deposit the money. If you’re worried about being scammed because someone knows the account number, you can always move the money to a different account after it’s deposited.
Also if he needs to pay bills, you can give him a separate account to write bills from or just have him mail you the bills and you can write them. Then he can just tell people that “corporate” will mail out the checks and they’re just going to have to wait a few days for it.
Anyone that you’ve mailed a check to has your account number and name…its right on the check. I’d be more worried about him taking the checks or any cash that comes in.
Rich is right! Plus whos cares how you get the money as long as you get it. You have other issues to worry about living out of state. I deal with out of state owners all the time.
The main things to watch for is:
“fake” repairs (always get proof, receipts, and pictures, always pay your repair bill separate from rent i.e. never let the manager deduct rent)
where you rent is
extended vacancies
Wow - those were all great postings and great information. Thank you!!! Clearly you all have “good” sound advice and suggestions. Thanks again. I think what I’ll do is open that Washington Mutual account where they can deposit the rents as they come in, watch it on the computer for bounces and then move it to another account. So much paperwork. I can see why property managers get paid so much - they undertake a lot of duties and responsibilities.
I can see why property managers get paid so much - they undertake a lot of duties and responsibilities.
Jagster,
Quite the contrary in my opinion. The “management” that property managers do takes VERY little effort in comparison to the pay. They basically collect the rent, answer the phone, and send you a monthly report for 10% of the gross (which can be anywhere from 30% to 100% of your profit). Anything else they do, they charge extra for (often including placing tenants). Highway robbery if you ask me!
Mike
Bluemoon06
Thank you for that brilliant info. I will set up that type of account - it is perfect for my situation and cutting out the mailing time will allow me to see if the check bounces sooner.
What do you think about this new service subscription that automatically deducts the rent from the tenants checking account (with their permission of course). There is no wait time to see if it clears. Don’t know what a subscription costs though.
Thank you again for that valuable info!
Jag
I own a management business and have to agree with Mike. However I only charge 5% and what I try to do is teach the owners how to manage themselves, then just provide maintenance for them.
Because I the flip side, some months 5-10% is nothing compared to what I do.