Does it make sense to offer a tenant money for providing post dated cheques?

[Nir]

Hi everyone,

The tenant, who is on disability and moved there 4 years ago, used to pay cash to the previous owner and would like to continue paying cash.

I believe as a tenant he has the right to pay cash although I live far from the property.

I am not sure what his main concern is providing 12 post dated cheques. perhaps, he prefers not to provide his bank account information to anyone or maybe just trying to save $20 by not ordering new cheques from the bank as currently he does not use cheques(?)

Does it make sense to offer him $50 for providing 12 post dated cheques?

I would appreciate any feedback on this interesting situation or any creative ideas how to try to convince a tenant to provide post date cheques.

THANKS,
Neil
ps. I understand I also have the option to ask him to deposit the amount into my account or to suggest that I use electronic fund transfer (EFT) but I actually prefer not to provide him with my bank account information and EFT is around $40 a month - not worth it when you have very few tenants.

 

[timk519]

QUOTE (investmart @ Feb 15 2008, 08:30 PM) ps. I understand I also have the option to ask him to deposit the amount into my account or to suggest that I use electronic fund transfer (EFT) but I actually prefer not to provide him with my bank account information and EFT is around $40 a month - not worth it when you have very few tenants. Another option would be to have him send you money as a "payee", just like paying a company bill.

My bank (TD CDN Trust) did that when I wanted to move money from my corporate to personal account. There was no extra charge for me to do this.

 

[SamEfford]

Another good option is email money transfer. Good as cash.

 

[Nir]

Thank you Sam and Timk519 for the suggestions.

However, this tenant does not have a PC nor access to the web.
Does it make sense, in this case, to just offer him $50 to buy cheques (well, I know they only cost $20 ) and provide post dated cheqes?

Regards,
Neil

 

[SamEfford]

The easy answer is no, it is the tenants responsibility to ensure the rent is on time. However if they are a good tenant, you may want to make it easier for them. Another option would be to set up an account with the same bank they use. An automatic transfer plan could then be set up to pay the rent.

 

[JohnS]

This might not work with this tenant, but the thought just crossed my mind about having the rent a bit lower if they provide those cheques, or set up an automated payment, kind of like people do with the rent being on time.

Say you want to get $1000 a month for rent. Tell incoming tenants that the rent is $1020 if they don`t do one of the above, but you`ll drop it down to $1000 if they want to make life easier on both of you. So, you either get a bit more money, or life becomes easier.

Any thoughts? Good, bad???

Oh - the reason I said that it wouldn`t work with this tenant would be because his rent is already set. Although, when it came time to increase the rent, it could be done then, I guess.

Have a good one!

JohnS

 

[Thomas Beyer]

option 1) ETF .. he gives you his account and you pull it in
option 2) post-dated cheques
option 3) why not give him a bank card to your bank with the right to deposit (only right on card) .. most of our onsite managers have these cards as they deposit cheques 1-3 times/month for older tenants not (yet) on ETF ...

the lease could specify a clause that cash payments are not allowed .. but you can`t in retrospect change his lease .. however you can tell him (in person or on the phone): the rent is going up $250 if he prefers to continue paying in cash .. better though to use option 1 to 3 ... and rent stays as is or is increased only $100 ..

 

[Nir]

Thank you Thomas and John for the input. Thomas, sharing your great experience as an investor is highly appreciated. I enjoy reading your smart answers every time.

I understand there are a number of options to resolve the issue. However, I wanted to ask if you can answer my original question - is it a good idea then to offer the tenant $50 if he starts providing post dated-cheques (as one of the ways to resolve the problems.. well, if he agrees..)?

Regards,
Neil

 

[KrustyKrabs]

I am not an investor in real estate, yet....but, since I am here, I`m on the right track.

I will spell it out as clear as daylight, `cause others are afraid to.

#1: If your tenant cannot afford the cost of cheques...then you have problems far beyond how you will be paid.

#2: A tenant paying cash just opens the door of denial and lack of proof of payment of rent. NEVER ALLOW RENTAL PAYMENTS IN CASH!

Hope this helps....even from a future investor.

 

[MikeMcCrae]

No.