If you have been following along, you know that my rent collections are outstanding; this month I had trouble. My renter bounced a check. I have not had a truly late payment in several years, other than the one tenants that I inherited when I purchased the building.
I have had a few payments after the first, but always received before the late fee kicked in after the 5th, and have not collected late fees, or even waived them, for rent paid on or after the 6th in a long time.
However, I recently had a check returned to me from a payment that was not honored by the bank. My renter bounced a check. Yikes! my mortgage is due and I am short rent.
I deposit my rent checks as soon as I get them. If it means a couple of trips to the bank, so be it. I have a bank branch in the building I work in, so going to the branch is easy. I even do it during the business day, on a break from work, so it doesn’t even cost me time or money to go there.
How to Make A Rent Deposit
When I make a deposit, I fill out a deposit slip and give it to the banker. I write down each check and the amount. That way, when I need to double check a deposit, I can bring up the deposit slip image on-line, and see what checks I have deposited. An ATM deposit only gives me a hard copy receipt, with the check images, and I do not want to have to find that receipt in a file somewhere. And, the image is too small to really see the individual checks. Of course, I also log the checks in Quicken, so I have two places to verify payments if I have to.
Once the deposit is made, I typically make sure I can see the deposit via online banking. If it is there, I know the deposit was done correctly.
One time had a case where instead of giving me immediate credit for a check drawn on the same bank that I bank at, the deposit was put into that account. I noticed after about three days and looked back at my receipt. Sure enough, the receipt had the wrong account number. It got changed, and luckily the money was still in the account, and all was well. It could have been much worse as the deposit was ~$3,200.
Check The Account Regularly – Online
I check the account daily for a few days after the deposits to make sure none have bounced. Once they have sat there for a few days, I transfer the money, after I have paid my rental expanses, to my investment account. This month, I got a text saying my balance was low and I was not expecting it. I immediately went online and saw a returned deposit and a charge for the returned item of $1,045.
Follow Up Immediately if there are issues
I texted my renter to get an explanation. She was off by $100 in her expected bank balance, and my check got returned. I requested new money, and for her to add $30 for the bad check. I could have also charged the $75 late fee, but I declined as she has been a great renter for just over three years. She also had given me notice she is moving at the end of November, as she could not afford it any longer. I did not want to add to the financial pain by charging an extra $75.
It turned out to be a non-event, and I got $1,000 cash right away, and the remaining $75 on the next Friday. That is the way a bad check should work out. The tenant wrote a bad check unintentionally. The money was almost there, she was not trying to buy time and send a check to avoid being evicted.
I have had checks bounce in my low-income days by some tenants, but for the most part my low-income tenants paid cash. That is acceptable, but takes more time to collect. If you are chasing down cash every month from a bunch of tenants, expect it to wear you out.
Start Evictions Early, If Needed
If this would have been a attempt at avoiding payment, I would have started eviction almost immediately. If a renter know rent is due, they should have it. A bounced check does not take any money from the renters account, other than the returned item charge. The rent money should still be mostly there.
Have you ever bounced a check intentionally? Ever have one that bounced that was difficult to collect?