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Back to: Landlord Success: Proven Strategies & Practical Advice for Stress – Free Property Management

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RENT PAYMENT

  • During the initial property viewing and at the lease signing discuss how the rent is to be paid. Currently you will probably collect the rent electronically by either Auto Debit or E transfer.
    • AUTO DEBIT- Most banks will allow you to set up your tenant to pay their rent automatically, via auto debit. This is my preference. You will need to have the tenant sign the banks auto debit form and you will need a blank cheque (or account number). Take the signed form and cheque into your bank and they will set up the monthly withdrawal in the computer.
    • This way the money is transferred automatically on the first of the month and it is automatic for everyone (this is my preferred method).
    • If the tenant calls mid-month and asks to stop the auto debit for this month, as they are short on cash, I tell them that it is impossible, and the banks computers have already set up this transfer and it can not be stopped. Try to get them to borrow the money from a friend or family member. Remind them if they can not get the money in the account the transfer will bounce, and they will be responsible for the late fee as discussed in the lease.
    • I find ATB In Alberta Canada has the lowest fees for auto debit services. Check with your bank.
    • E-TRANSFER – Many tenants like to use e-transfer every month. It works well, if they remember to complete the transfer (That is why auto debit is preferred from the landlord’s point of view).
    • If you agree to accept a monthly e-transfer from the tenants, set up your rental bank account to automatically accept the money into the account so you do not have to deal with it monthly.
    • POST DATED CHEQUES – What is a cheque you may ask? This is how we used to do it. Some older tenants may still request this. They will give you 6 or 12 prewritten paper cheques dated for the first of each month. You will need to deposit these at the first of every month in a bank machine or bank branch. Keep the receipt, write the tenants name on it, take pictures of each cheque when you get them.
    • CASH – In some cases the Tenant may want to pay you cash every month. So, you may have to go and collect the cash monthly. There may be a reason they want to pay with cash or use Money Mart Gift certificates. It probably means their credit is bad and the bank will not give them an account, or the account has a garnishee against it for child support or back taxes. When you discuss how the rent will be paid at the interview stage this type of payment could be a warning sign.
    • If you agree to cash, you can make it their responsibility to deposit it in your bank for you. I give them the bank name and account number and tell them to go to their local branch and deposit it.  Have them and text you when it has been deposited.

What ever method you use make it as simple as possible for you.

  • Some tenants may want to pay the rent on the 2nd or 3rd day of the month because they get paid on the 1st. I don’t necessarily have a problem with this if we all agree on the date and the money is paid as agreed to. Just make sure you have the money in your account in time to make the auto debit payment for the mortgage.
  • If there are 2 or 3 separate tenants that are roommates, make one of them collect the money from the others and the one person is responsible for the transfer. This way you only have one contact, and it is their credit that will be hurt if their friends are dead beats.

LATE PAYMENTS- If the tenants call up and say they are going to be late with the rent payment, and there is absolutely no way they can get the money from a friend.

  • First of all thank them for letting you know there may be a problem in advance.
  • ASK: How much cash do you have now?
  • ASK:  When will you have the remainder?  Get them to agree to this date, and find out how they will be getting the money, their next payday, Mom, Friend, Selling items on Kijji, etc.
  • I ask them to e-transfer everything that they have now, or as much as possible on the regular payment date. Then have them agree that they will send the rest as soon as they get it (payday etc.).  It is always better to get some cash rather than none.
  • I also tell them to add the late payment fee (as per the lease) to the final payment.
  • Keep on them; make sure you get all of the rent in the current month. Try not to let them fall behind.
  • Ask for an explanation.  Is this a one-time problem or if they think this will be reoccurring?  That situation would not be acceptable.
  • This may happen on occasion, but if it becomes a constant problem see the Rent Collection Section. 
  • If it is a constant problem, plan on not renewing there lease next time it becomes due.