Problems with initial rental deposits - Posted by Kim (South Tx.)


#1

Posted by Joe Kaiser on October 18, 1998 at 01:41:26:

This strikes me as just plain silly. How could prospective tenants be expected to wait two weeks in order to be approved? They typically need to plan ahead themselves and get their relocation plans firmed up ASAP (tenants are people too). I just wouldn’t want to tie somebody up and then show them the door.

Plus, I’d have to write refund checks left and right. I hate writing checks.

The system I like best goes like this . . . a few thousand bucks on a cashier’s check goes a long way to getting you approved to lease option my house. I’ll let someone else worry about the application fees.

Guy last month paid $5k down as nonrefundable option consideration. In my book, that’s qualified enough. If I memory serves, I’ll remember to check his credit sometime soon. If memory serves, I’ll remember to check is credit sometime soon. If memory serves, I’ll remember to check is credit sometime soon.

Joe


#2

Problems with initial rental deposits - Posted by Kim (South Tx.)

Posted by Kim (South Tx.) on October 17, 1998 at 22:56:09:

I am hoping that someone can give me some better direction in handling initial rental deposits on mobile homes. We have a prospective tenant fill in an application and will take an initial deposit at the same time. If the application doesn’t work out, we give the check back. After they have been screened and have been approved, we deposit the check. When they move in, we then take their rent money and have them sign a lease. It may take them a week or two to get into the rental, and in this time period, we have had people “change their minds”. (If I have them sign a lease at the same time I take the application, I am worried that they may not check out.) I am wondering if anyone has dealt with this and what they did about it.


#3

Why I don’t take cash… - Posted by Carol

Posted by Carol on October 18, 1998 at 15:11:07:

A realtor friend of mine does a reasonable amount of property management. They used to take cash payments until a TRUCK was driver THRU the WALL of their office by someone who thought there must be cash on hand.

They now have a sign up “No Cash Payments”, and I have followed suit. I will take the $25 app fee (which I let be applied to the first month’s rent) in cash, and sometimes a deposit. All else is check (local only) or money order. Very seldom have a check problem. If I do, it goes certified or money order. I have an office where payments may be left, or a PO Box to which they may be mailed.

Just another point of view worth< 0.02.
Carol


#4

Re: Problems with initial rental deposits - Posted by Rob FL

Posted by Rob FL on October 18, 1998 at 09:35:01:

I have a simple and effective program that so far, since I have had it in place, has not failed me yet. When they fill out an application they pay a credit check fee, in certified funds, cash, or money order. Never take a personal check from anyone until the second month’s rent comes along. When they sign a lease with me, they pay the deposit money, again in certified funds, cash, or money order. If they change their mind on the year lease then I keep their deposit and find another tenant (I have never had someone change their mind, it would be a very expensive idea for them). When I give them the key to move in, they pay me the first month’s rent again in certified funds, cash, or money order. I never have to worry about a bounced check before they move in, and everyone understands why I won’t take personal checks before the 2nd month. I have been on this program for about 5 years and its worked great. A saying that I always use is “Cash doesn’t bounce.”


#5

Re: Problems with initial rental deposits - Posted by JPiper

Posted by JPiper on October 18, 1998 at 24:24:00:

Kim:

I handle it somewhat differently than the post below.

I have the tenant fill out an application which authorizes an investigation of their references and into their credit. For this I charge an application fee of $20. The application states that this fee is non-refundable. I also have them sign a form that states that once the tenant is approved they must execute the lease documents and pay the deposit and first month’s rent BEFORE I will hold an apartment.

Assuming the tenant is approved I notify them of their approval. I prepare a lease for their signature. I require that they pay the deposit and first month’s rent via cashier’s check. Again, no apartment is held until I have received the cashier’s check.

I would not be interested in receiving a check for the deposit or the first month’s rent…or in earning interest on the float. This bogs the process down trying to determine when and if the check has cleared. I’m not interested in holding checks to see if someone is approved. I’ll collect my money in “good funds” when I approve, or I will continue to show the apartment…which I inform all prospective tenants of. I wouldn’t want someone to move in UNLESS I KNEW I had good funds…and I wouldn’t want the bookkeeping mess of trying to track whether their check is good or bad…nor would I want to delay move-in while I waited to see if the check was good.

I would also be unconcerned about my next check for the 2nd month and whether IT would be good. That’s what I screen tenants for to begin with.

As far as earning interest on the float…this strikes me as silly. For approved tenants I will have their deposits to earn interest on. I don’t have HUGE numbers of rejected candidates that I would waste my time trying to earn a few % on their money…I’ve got better ways to earn money.

JPiper


#6

Re: Problems with initial rental deposits - Posted by Mr Donald (NORVA)

Posted by Mr Donald (NORVA) on October 17, 1998 at 23:25:50:

How much is your deposit? What is it used for? Credit check, first month’s rent, last month’s rent or Damage Deposit?

Here’s how to create a legal float and ensure that your tenants are credit worthy.

Have them fill out your application, and attach a deposit check - for damage deposit. Make it clear that $20 or $25 of the deposit is non-refundable, and to be used for the credit check. Period.

Deposit the check. Wait to see if it clears - and make sure that you only accept checks drawn on local banks - no starter checks or counter checks or anything like that.

Also, don’t accept cash, or money orders, or cashier, certified check for this deposit, or it’ll be the only money that you may see.

Deposit the check in your local bank, or better yet, certify it at their bank to ensure the funds are there and will clear.

If you don’t certify it, wait two weeks or so until approving the tenant if you can - that way you’ll know if they have cashflow management problem (in other words, they can’t balance a simple checkbook).

If you can’t certify it, or it bounces, then simply DON’T RENT TO THEM.

Never commit to your prospective tenant right away, just let them know that you’ll be getting back to them as soon as the credit check and application are reviewed by your management office - and that it could take at least 2 weeks for a thorough investigation.

Once the check clears for certain - usually after two weeks, allow them to move in if you accept them, and collect their first month’s rent then.

If they change their mind, TFB :), as they’ll have to wait for the funds to process through the bank - and you collect your $20 or $25 non-refundable credit check fee. Tell them that your management office will forward the deposit back to them (less the credit check fee within two weeks to the address on their application).

You shouldn’t have any problems with this setup at all - just check your local and state laws on whether you can allocate part of the deposit as a credit check fee. If not, just collect a second check for $20 to $25 for the credit check fee, with the stipulation and understanding that it is non-refundable.

You should always make the clearing of the check part of the application. Enjoy the float for 2-4 weeks as a result - and the interest too.

Mr Donald.
dlm@bellatlantic.net


#7

Re: Problems with initial rental deposits - Posted by michelle

Posted by michelle on November 13, 1998 at 01:21:45:

recently i went to look at an apartment with the owner(who happened to be the owner of a rental company). she tol us that we had the place and took a $200 deposit to hold the place. after she had avoided my calls for 2 weeks i finally got a hold of her and she told me she had given the place to someone else. now she held my $200 for 2 weeks and collected interest. i also found out she had collected money to hold from 8 other people. she gave back $182 minus an $18 application fee(which she forgot to mention the night she took my money).
is this the only way for you sick landlords to earn your money? i was forced to move out of my old place at christmas time because my landlord had sold the house. now,i needed to find a place and this lady could of cared less. she had no intention of renting the place to us, but she took my money anyway. she makes her money by swindeling it out of innocent people. yah, sure, its easy to take an application from tons of people and collect the money. why not, just tel