Rents sent directly to bank-AndyR method

Since you asked, here is how I use the bank to receive rent payments:

I use an 8 1/2 x 11 deposit slip perforated so the top third can be torn off. These are available from Delforms and others. The deposit slip is essentially blank except for the magnetic ink account number.

I run the deposit slip through an ink jet printer. The resident’s name and lot number are printed on the top third of the deposit slip. There is a space to indicate the amount paid. It looks like a typical tear off and return with payment remittance. I include a return envelope addressed to the bank.

The bank receives the envelope with the resident’s check and my deposit slip and makes the deposit into my checking account. I can view an image of the deposit slip on line. I can see the residents name, lot number, date and amount they paid. I use a bank in the same town as the park which saves a few days mailing. It also means checks get deposited immediately even when I’m away and unable to get the mail.

Not wanting to take the time to click and view every deposit slip online, the residents use cents as the lot number. They make the check out for $200.15 if they live on lot 15. I can see at a glance who has paid.

Residents can also pay in person at the bank. They can pay cash and get a receipt. The bank loved the idea of all these prospective customers coming to their bank so I used it to negotiate a lower mortgage rate.

The remaining two thirds of the 8 1/2 x 11 sheet is a professional looking rent bill. The residents address and the company’s return address are also printed in this section. Just fold and insert in a standard dual window envelope. With a window envelope, there is never a chance for a bill getting in the wrong envelope.

My park manager is glad he doesn’t have to deal with checks and I can pay him less. The residents seem to take sending payments to a bank more seriously. The bills look like they are from a big company which helps.

I print the bills with Quickbooks Simple Start. Free software. Prints 40 bills in a few minutes while I get coffee.

Andy,

Congrats and thanks for sharing great info.

How did you find this park, and what criterias and numbers did you use to decide (30/60 rules?, cash on cash return)?

Post Edited (01-18-08 04:34)

Thanks. The innovation is printing resident names on the deposit slip yourself and having the bill and deposit slip on the same sheet.

My criterias were: cap rate 10 to 12%, based on my cost of owner ship. That is close to the 60/30 rule. I added no dollar value to the offer for the empty lots. Inevitably, you will discover deferred maintenance which offsets the value of the vacants. Remember, vacant lots cost money in taxes and upkeep. You may discover it needs an $1800 electric box or pipe repair to make it serviceable. I would value the vacant at the cost of the utilities and site work installed. I wouldn’t give too much value to earnings potential unless you were certain you could rent them quickly.