How To Collect Rent Payments Online (Podcast #325)

Podcast Host, Andrew Schultz, discusses how to choose an online rent payment company, including the discussion of well-known systems like PayPal.

We’ll also chat about odd-document requests from tenants and how to respond. Your rental property’s inspection paperwork? No need to show a tenant.

Last, but not least, we’ll discuss a tenant who ripped an entire rental property down to the studs post-eviction and how to handle these types of situations as a property manager.


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Show Transcription:

Voice Over (00:04)

Welcome to the Rent Prep for Landlords podcast. Now your host Andrew Schultz.

Andrew Schultz (00:08)

Hey everybody. Welcome back to another episode of the RentPrep for Landlords Podcast. This is episode 325 and I’m your host Andrew Schultz. On today’s episode, we’re going to be talking about tenants tearing rentals down to the studs best online rent payment systems, odd document requests from tenants and so much more. We’ll get to that right after this

Voice Over (00:34)

Forum Quorum, where we scour the internet for ridiculous posts from landlords and tenants.

Andrew Schultz: (00:42)

Boy, this week’s forum quorum is quite a doozy. We’re pulling this one from the ask Reddit, sub-Reddit, a title of the thread was landlords of Reddit. What is your tenant horror story? Go ahead and read this one out to you. The tenants failed to pay rent for a few months in a row. And then they were served with eviction papers. The people were out of the place on the day of the eviction, but they had taken everything with them. Everything. Let me clarify that everything isn’t just their stuff. It includes the refrigerator, the shower stall, the kitchen sink cabinets, baseboard heaters. They basically stripped the entire house down to the studs. And the only thing left was the carpet and linoleum. They even cut the electrical wiring and took the outlets. We kind of suspect that this was some kind of salvage operation.

Andrew Schultz: (01:28)

Like they rented the place, stripped it for everything. It was worth sold to what they could and ran away. Boy, this is kind of a unique situation. I’ve been in situations where we’ve had tenants who have taken things like appliances or they’ve swapped in. We had somebody take a beautiful stainless steel refrigerator and swap it in for a non-working beige-colored, a refrigerator, and try to claim that that was the fridge that was there when they moved in. I don’t think I’ve ever had one so bad that they’ve stripped things right down to the studs, pulled the electric wires, and things like that. And I would probably agree with the author of this post and say that, yeah, chances are, this was somebody who was looking to go in and just strip out everything that they could possibly get their hands on. Anything that had value for resale.

Andrew Schultz: (02:15)

That’s kind of what it sounds like they did here. This is an incredibly unfortunate situation it’s going to result in more than likely a massive insurance claim. And by the sounds of things, you have no idea where these people went or moved to. So tracking them down is going to be a bit of a challenge, even if you do want to try to pursue it in court. And then you kind of have to weigh your options to determine if court’s going to be the best option or not. I would say that this probably falls back on tenant screening at the end of the day. If I was to go back and look at the tenant screening on these tenants, I bet you, there’s some kind of a red flag here that would have popped out that would have been some sort of an indicator that maybe this is not the tenant that you want.

Andrew Schultz: (02:54)

I wonder if there was tenant screening that was done or, or the quality of the tenant screening that was done. That’s one of the things that was first to come to mind when it came to this. The second thing that came to mind was actually, how did they manage to pull this off without someone notifying the landlord? I know in a lot of instances with the properties that we manage, the, we try to make friends with either neighbors or other landlords who are in that same neighborhood. So if they see something suspicious going on at our property, hopefully, they will have the common sense to call us or call the police or something so that it gets investigated before it gets to this point. I mean, when you start seeing people, and I guess if you had things that you were, you know, you were living in the home and you were moving out appliances, it might not seem so weird if you’re moving appliances at the same time as clothing and stuff like that.

Andrew Schultz: (03:41)

But if you see people walking out with chunks of pipe and chunks of, you know, just bulls of wire and stuff like that, that’s something that I would question. It’s unfortunate that this happened, hopefully that this landlord is able to, you know, deal with their insurance company and get the situation rectified, get their place back on the market. But man, that is definitely one of the one of the worst tenant horror stories that I’ve heard in a long time. I would say that one of our worst tenant horror stories was the tenant who literally disassembled an entire ceiling fan. And when I say disassembled, I mean, literally every screw, every nut, they pulled the motor assembly apart, they pulled all the copper out of it. They didn’t take any of it. They left it all laying on the floor in the living room.

Andrew Schultz: (04:28)

This was an eviction that we had to process. And when we got access to the property after the tenant had moved out, we discovered that like, that was their, I guess their act of petty, revenge to us was to literally disassemble every single piece of a ceiling fan and just leave it laying on the ground. I don’t know if they thought we were just going to put it back together or what, but I mean, obviously we wound it up, just swapping the ceiling fan. We’re not gonna spool the copper back into the motor and everything else, but it’s, it’s surprising, you know, the levels that some people will go to when they think that there’s nothing that you can do to them. And it sounds like that’s kind of what the situation was here. So hopefully again, that landlord’s able to rectify the situation, hopefully, they’re able to locate these people, maybe get a judgment against them, you know, collecting the judgment. Again might be a challenge, but hopefully, they’re able to do something because that’s just a, that’s just wrong on so many levels,

Voice Over: (05:21)

Water cooler wisdom, expert advice from real estate pros,

Andrew Schultz: (05:30)

Payment methods are something that gets talked about quite a bit in the Rent Prep for Landlord’s Facebook group. And actually this post came from the Rent Prep Landlords Facebook group, and it reads, I see a ton of members here asking about using Venmo or PayPal, friends, and family to collect rent, maybe going over why those aren’t great ideas and some alternatives. So the first question I have is did you know that Venmo and PayPal are actually the same company? They’re both owned by PayPal holdings. We’ll get into that a little bit more in a couple seconds, but I did want to mention some good options for collecting rent payments. Before we get into the reasons why Venmo and PayPal are both bad ways to collect rent payments, the first thing I would recommend is having a good piece of property management software that can do an ACH tenant payment or a credit card tenant payment native through the software.

Andrew Schultz: (06:20)

There’s a ton of different property management software out there at varying price points, varying levels of professionalism. Some of the bigger names out there would be a Yardi AppFolio Buildium cozy. I know is a free option or at least a freemium option. I think once you get to a certain number of units, they start charging. But the nice thing about having a piece of property management software versus just using an ad hoc solution for a rent payment is going to be the fact that the software will help you keep track of so much more than just a rent payment. It’ll let you, you know, track your maintenance and your other accounting functions and things like that. So you might want to look into a little bit more robust piece of just management software rather than just trying to find a solution that handles only the payment aspect.

Andrew Schultz: (07:07)

And then as you grow, you’ll already have those systems in place and it’ll make it a lot easier for you to expand your rental portfolio if that’s what you’re trying to do. So now I’m going to talk for a minute about why PayPal and Venmo are terrible, terrible options for accepting rent payments, PayPal, friends, and family is literally meant to be used to send money between friends and family. It’s not meant to be used for business transactions, such as paying rent. You as a landlord have absolutely zero protection when using PayPal to collect rent, using friends and family. The other thing PayPal will do is just randomly. We decide to lock your account for you to investigate. If you have like a large sum that’s coming in and then coming out on a, on a recurring basis, that’s something that could trip a red flag on PayPal’s end, especially if they notice a pattern to it, they can lock your account for as long as they want while they’re investigating the situation.

Andrew Schultz: (08:04)

I know people that have literally had PayPal accounts locked, where they’ve been using them for like credit card processing for businesses and things like that that have had tens of thousands of dollars just locked up indefinitely while PayPal does an investigation. Paypal is by far the worst possible platform to use for a rent payment. I do not recommend using PayPal for a rent payment, either using the friends and family option or using the paying for a service option. And if you use the paying for a service option, you’re going to have to pay a fee or the tenant may have to pay a fee when they go to make that payment. So that’s not necessarily the best option either. Venmo is owned by PayPal holdings. So you have to understand that Venmo is largely going to have a lot of the same policies as what PayPal would.

Andrew Schultz: (08:52)

I mean, they are separate companies, but they’re all basically on the same style of platform. And that’s something that you should be concerned about as well. So, so keeping in mind that these two companies, these are owned by the exact same parent company, I would be very, very leery of using either one of them to collect a rent payment. Venmo also offers absolutely zero buyer and seller protection or in this case, landlord and tenant protection. So if the transfer of funds doesn’t happen or if the tenant types in the wrong information, or if you type in the wrong information, when you’re setting up your account, you know, you could lose access to those funds very, very easily. So Venmo is one of those services that I would be very leery about using for rent payments, one service that we’ve been able to use with a lot of success in the past is a company called pay near me.

Andrew Schultz: (09:42)

You could find them at paynearme.com. I’m not sure what their pricing is at this point, but I know that they do have an option for tenants where they can essentially walk in and pay their rent in cash at just about any seven 11 location or any CVS pharmacy location. So then they don’t have to worry about, you know, this is a good option for tenants that are non-bankable. Somebody who doesn’t have a bank account with the ability to make a payment online, this is a great option for them. The nice thing is when we were using this service, that’s actually now integrated right into our property management software app folio. But when we were using it as a standalone product, they would actually send us an email as soon as the tenant made their payment. And it would tell us, you know, the amount of the payment, where the payment was made and when we would expect that a payment in our bank account.

Andrew Schultz: (10:30)

So it was very, very convenient to use that service. You might want to check something like that out. If you have tenants who are not set up with bank accounts, or who would prefer to make a cash payment, that way you don’t have to take a cash payment in the field, you also don’t have to wait for them to buy and mail a money order, much, much more convenient solution than screwing around with some of these different online payment options. Our next bit of wisdom comes again from the Rent Prep for Landlord’s Facebook group. And it reads besides basics likes the appliances. What sorts of things do you leave in your rental for tenants to use? So we typically don’t leave a lot of things in our rentals for tenants to use when we’re managing a property for a property owner, we recommend to them that they remove everything from the property that they never want to see damaged.

Andrew Schultz: (11:14)

And the reason we do that is because whenever personal effects get left behind, even in a locked room or something like that, we don’t want the responsibility of those items. And we also don’t want the tenants to be out there just breaking and misusing somebody else’s belongings. So we actually are pretty limited in what we leave in an apartment when we get it ready for a new tenant to take possession. So besides the basic like appliances, I would consider maybe a basket with some cleaning stuff as kind of a welcome home maybe a small gift card for a local pizza place or something like that. If you’re feeling generous a fire is not a bad idea and make sure that you understand what type of fire extinguisher you are installing as well. There’s different varieties, a B and C, depending on what type of fire you’re trying to put out.

Andrew Schultz: (12:04)

You obviously don’t want to use the wrong fire extinguisher on the wrong type of fire that obviously could create even bigger issues with more fire if you’re using the wrong type of fire extinguisher. So you do want to be cautious of that. And if you’re going to include a fire extinguisher, you also need to make sure that you add that to your inspection, your periodic inspection sheet, to make sure that the fire extinguisher hasn’t been used and not replaced that it’s still within serviceable date, things like that. You know, one of the worst possible scenarios that could happen is your tenant goes to use the fire extinguisher that you, that you provided for the home and find out that the fire extinguisher doesn’t work because it’s 15 years old and has never been checked. So fire extinguisher might not be a bad idea, a couple of other things that we always make sure to leave in the apartment or in the home, a roll of toilet paper, you know, is, is a nice thing to leave.

Andrew Schultz: (12:54)

You never know when you’re going to get to your new place and need to use the bathroom in a hurry. The number of times that you’ve walked into a vacant apartment and found that there’s no toilet paper to be had, you know, that could create a real situation for you. So I definitely like to leave at least a roll of toilet paper. The other thing that we do is always make sure that there’s at least a shower liner curtain, as well as the hooks. And that, that is actually up on the shower curtain rod. The reason I say that is because sometimes you’ll just need a quick shower. You know, when you’re done moving stuff, you might not have unpacked your shower curtain yet. You don’t want that water all over the floor. So sometimes just a simple thing, like having a shower, curtain liner in place will prevent you from seeing property damage, you know, right from the get-go right from day one of your tenants’ tendencies. So that’s something to keep in mind. Those are easy and inexpensive things that you can do, things that you can provide to your tenant to make their move and experience a little bit easier and start things off on the right foot

Voice Over: (13:55)

Feet on the street. Real stories from real property managers

Andrew Schultz: (14:04)

And today’s feet on the street comes to us from Reddit. This one pulling from the landlord subreddit. And this is titled what’s the weirdest request you’ve received from a tenant. I’m just curious as to what requests tenants are asking for these days, has anyone received any odd requests, either in the contract or something that they want in the house prior to move in? So I went through and scroll through this thread and pulled out a, what I thought was the best response. I had a tenant ask for the building inspection from when I bought the place she’d been living in there for eight months at this time, she did not get the document. Yeah. That’s probably something I would say. There’s absolutely no reason to ever show a tenant. The, the inspection from when you bought the building I don’t understand why a tenant would even ask for that.

Andrew Schultz: (14:48)

I feel like maybe there’s more to that question from the tenant as to why they would be asking for that document, but I definitely would not do anything to provide something like that to the tenant. They don’t need it. You paid for the inspection. They don’t have rights to it by any stretch by the sounds of things. So I would just tell the tenant no, and move on. Another one that was kind of interesting that I had seen in here had a tenant, want a nicer thermostat once another wanted to install ceiling fans themselves, nicer thermostat. One, I could almost see a justification for if the tenant wants to pay you to install a nicer thermostat, if they want to pay for the thermostat and they want to pay for the install than I would have no problem with that, just as long as the thermostat stays with the house when the tenant moves out, that’s now considered a fixture.

Andrew Schultz: (15:34)

I would do that. I mean, we’ve had tenants that have requested like the, the nest thermostats that they can control from their smartphone and stuff like that. I have no issue with that. There’s also some companies out there that if you have like a larger portfolio will allow you to do digital thermostats that can be monitored remotely from like a central office or something along those lines. So that might not be an unrealistic request from a tenant install, a ceiling fan themselves. No, I don’t want a tenant touching the electric on a property. If you, again, if you want to pay for a ceiling fan and pay for the install of a ceiling fan, we’ll gladly do it, but we’re not going to go ahead and just make changes to the property or we’re not going to allow a tenant to just go ahead and make changes to the property without having the landlord’s permission and our permission.

Andrew Schultz: (16:18)

And certainly not doing something where it’s electrical based. We don’t want a tenant that’s causing an electrical short or something like that and wind up with an even bigger issue. So that would be a affirm know for me, that pretty much wraps things up for this week, but there’s always more to check out if you’re looking to find me head on over to ownbuffalo.com for links to all of our social media, our YouTube and Facebook pages are where we post the majority of our content. If you’re looking for tenant screening services, head on over to rent,prep.com and check out all the awesome services that they offer. And don’t forget to check out the best free landlording resource on the internet, the Rent Prep for Landlords Facebook group. That’s a private Facebook group for landlords and property managers coming in at almost 12,000 members strong. You can find that group over at facebook.com/groups/rentprep. Thank you all so much for listening. We really do appreciate it until next week. I’m Andrew Schultz with own Buffalo for rentprep.com, and we’ll see you next time.