How landlords can set up ACH payments with tenants and get automated rental payments every month.

by | Indiana real estate, Indy Anna, Real Estate Investing

Landlords: here’s how to set up ACH payments so that you get automatic monthly rent payments.

As a landlord you should know how to set ACH payments to get rent payments automatically every month.  In this class we’ll talk about how to set your bank account up so that you can accept automatic rent payments through ACH and other automated payment methods.

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Now for today’s class on setting up ACH payments…

BigReia - How landlords can set up ACH payments

How landlords can set up ACH payments with tenants and get automated rental payments every month.

Also here’s a FREE downloadable and editable copy of an ACH form you can use with your tenants.  The ACH authorization and/or credit card authorization form (VERY important):
You can download it for FREE HERE.

A landlord’s rental property could be worth over $10,000 more if they get paud through ACH. ACH, or automated clearing house, payments were started in the 1970s as a way to avoid paperwork and was only available to big companies.  

Thanks to technology and advancements now any landlord or individual can take advantage of automatic payments made directly into your bank account.  In this class we will talk about how landlords can set up ACH payments for automatic rent withdrawal, we’ll go over what services and banks to use to set ACH up, avoiding costs and delays with ACH and then we’ll address concerns about fees, daily limits and security.

For more info on this or to get in touch accountants who can help with ACH you can use our People Page at:
https://www.BigReia.com/People

There are a few different ways for a landlord to set up ACH or automatic rent payments.  

First you can set ACH up with your bank, a third party service or another automated payment service like Zelle.  There are some banks like Chase that allow ACH transfers for free and with no fees as long as the other account is also a Chase account.  Services like Zenlord Pro and Cozy (Apartments.com) allow for ACH payments with no fees or fees of $5 or so charged to the renter.  

You can also let use a service like Plastiq which allows your tenant to pay rent with a credit card and it charges them for the fees.  Other third party services like ClearNow.com and PayYourRent.com allow ACH payments with no or low fees and act as a buffer between the landlord and the tenant so the tenants wouldn’t see your bank account number.  Lastly you can also use a service like Zelle which has a daily limit but at banks like Chase there are no fees for these money transfers and they can be set to automatic.

There are costs and delays that come with ACH, but if you set this up correctly you can avoid making common mistakes.  

Depending on your bank and the tenant’s bank, you may be able to set up ACH payments every month for free.  If not, you you want to know the exact costs and compare them to the other services mentioned above.  To avoid delays in funding you can choose a bank like Chase that has 24 hour funding.  

Another way to speed funding is to make sure the ACH transfers are done as early in the morning as possible in the local time zone of tenant’s bank.  Many of our out of state landlords come to use without taking time zones into consideration and in one case when I changed the time of the tenant’s transfer the landlord got his money 72 hours faster.  So compare costs and get free ACH if possible, go with a bank with 24 hour funding and consider the local time zone for transfer times.

As a landlord collecting ACH payments, there are some things that you need to know about fees, daily limits and security.  

We have talked about fees above, but there is one last fee that a landlord needs to know and it is if you exceed the daily limits.  Your bank may have a daily limit attached to money transfers of any kind, whether ACH, credit card merchant accounts or Zelle payments.  To avoid paying this fee you can separate payments into different days, pay a standard monthly fee that will be less than the daily limit fee or in some cases you can just request a different account or that your bank remove the daily limit.

The daily limit for ACH has increased over time and now is over $1M daily. https://www.nacha.org/news/same-day-ach-payment-limit-increase-1-million 

Once the ACH payments are set up they are totally safe and secure for both and your tenant and they can easily be changed at any time.  While a check may take up two seven weeks to bounce and a credit card charge may be disputed up to 90 days after, an ACH will usually be confirmed within 24-72 hours (according to RentOMeter.com) and is very difficult to dispute or reverse. 

An additional security concern some landlords have about ACH is that they don’t want their bank account number and routing number shared with their tenants.  

First, keep in mind that this information is on every check you write from your business account.  Also if that is the main concern you can use one of the third parties mentioned as a buffer so nobody sees your account info. 

Three steps in setting up ACH:

Step ONE: First, use our criteria above and pick the right bank with the ACH fees, funding times and other money transfer options (like Zelle) that are the best fit for you snd sign up with your bank and/or the third party service you’ll be using for automated payments.

Step TWO: Next, update your lease agreements to reflect how your tenants can set up the ACH and automatic payments and their deadlines in doing so from the moment they sign the lease agreement.

Step Three: Carefully go through the first month’s statement to make sure that you weren’t charged any incorrect fees, given a wrong account status or for any other errors.  This can save you thousands but it is important you catch the mistake right up front or it may be irreversible.  For more on EFT (Electronic Funds Transfer) and ACH guidelines and requirements you can also check out The Electronic Payments Association website at Nacha.org: https://www.nacha.org 

If you have any other questions or want to with our bankers, accountants and/or legal people about this you can go here:
https://www.BigReia.com/People 

The ACH authorization and/or credit card authorization form (VERY important):
You can download it for FREE HERE.

Today we discussed how landlords can use ACH payments and other services to get automatic monthly rent payments.  

There are multiple solutions to get ACH payments set up while reducing or eliminating fees, delays and security concerns.  ACH and other automatic payment services are a growing number of examples of how individual landlords and other real estate professionals are able to take advantage of technology and convenience that was once only for large governments and corporations, these changes are improving life for real estate investors and small business owners in general.

The ACH authorization and/or credit card authorization form (VERY important):
You can download it for FREE HERE.

Thanks!  = )

~ Indy Anna

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