Preventing Tenant Payment Reversals
Today, I want to delve into the issue of tenant payment reversals—a real nightmare for landlords. If you've ever faced this, you know how problematic it can be. Maybe a tenant reverses multiple months' rent—that's a real setback. We've been through this, and today I’m going to give you strategies to prevent it.
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Understanding Payment Methods
Unless you're accepting cash—which I advise against—ensure you have a reliable method to track rent payments. Processes like using Zelle or property management systems like Buildium or AppFolio offer excellent solutions. These platforms help prevent mishaps by keeping a solid paper trail, essential if issues arise, such as an eviction case, where insufficient records could be detrimental.
Certified Move-In Funds
First and foremost, always insist on certified move-in funds. Only accept cashier’s checks or money orders during a move-in, especially if the tenant is moving in quickly. Electronic payments might bounce or have errors, leaving you at risk. If it's only a month or so out, leveraging your payment system is fine, but never hand over keys without those certified funds first.
Understand Your Payment Processor
It’s crucial to review the payment processing details of any vendor or management company you use. I learned this lesson the hard way. After a tenant reversed three months of payments, we faced chaos trying to resolve it. Knowing who to contact and how to handle such a situation could save you from running around in frustration. Ensure you understand the fine print—how reversals can occur and what recourse you have to contest them.
Conduct Thorough Credit Checks
Credit checks, simple as they sound, are indispensable. If you can't recover funds due to reversed payments, start the eviction process as you usually would. Your standard notice to vacate might encourage some tenants to leave without further trouble, sparing you from court issues. Moreover, when you file against such tenants, their credit report reflects the outstanding balance. Future landlords will see this and perhaps think twice before accepting them as renters.
Conclusion
In summary, ensure you:
Obtain certified funds before move-in.
Familiarize yourself with your payment processor’s policies.
Conduct comprehensive credit checks as a preventive measure.
Remember, a bit of prevention is indeed worth a pound of cure. And if you need more guidance, check out our application screening video linked on our website.