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Efficiency: ACH for Rent Payments

In part two of the Efficiency series, I am going to discuss rent payments; specifically the most efficient way to receive payments that can "kill two birds with one stone" for your rental business. First let's discuss the most common ways rent is paid.

  1. Cash - This method is a bit antiquated but still acceptable. Lends itself to being spent before being deposited into the rental checking account and understates the income received. Aside from that, proper handling isn't always completed. When receiving cash payments for rent, AMH recommends that a receipt, signed by the property manager or landlord, be given to the tenant, that the payment gets recorded into the accounting system, and a deposit slip is immediately made for that payment listing the address and tenant the payment came from. Multiple cash payments can go on one deposit slip.
  2. Check - Another acceptable and somewhat antiquated method of payment. There are benefits for the tenant in being able to pay rent via check not for the landlord or property manager. For tenants, particularly if they are using a checkbook with the carbon copy feature, have written proof that a check was written for their rent. For the landlord there is the risk of the check bouncing, being a fraudulent check to begin with, and that means you are out of rent. This isn't always the case but it does happen. When receiving a check, AMH recommends the same procedures for handling a check as we do cash. In addition with mobile deposit being available a most banks, you can skip the deposit slip step and deposit that check via the mobile deposit capabilities at your bank, if applicable.
  3. Money Orders - Like checks but are more secure in terms of they do not bounce. To obtain a money order, the purchaser MUST have the money on hand for the amount of the money order they are purchasing. Money orders can be deposited via mobile deposit just like checks. Again, AMH recommends following the aforementioned handling methods aside from the deposit slip. Use the mobile deposit feature to deposit the money order just like you would with a check.

Now for some new ways rent is being paid.

  1. Venmo
  2. Zelle
  3. Cozy
  4. Cashapp
  5. SparkRental
  6. Tenant Cloud

All of the above are methods to pay or send money to someone effortlessly. The aps above make it so tenants don't have to leave their homes to get their rent paid. The apps are made available for smartphones and with a few simple touches to the screen, the rent is paid. AMH is not familiar with the process involved with the apps listed above and cannot give any advice other than to immediately record the payment and issue a signed receipt to the tenant.

Lastly, the method we HIGHLY recommend for receiving rent payments is ACH transfers from the tenant's bank account to the landlord's or property management company's bank account. Often run a few days before the 1st, this method all but guarantees no late fees AND acts as a great pre-screening qualifier for obtaining your ideal tenants.

Although some of the apps mentioned above can deliver funds much more quickly, ACH has more advantages for the overall performance of your business. Efficiency is key here and ACH allows for that much more so than the other payment methods discussed above.

For more information on ACH payments, schedule a consultation HERE.

AMH Bookkeeping, LLC. The Landlord's Bookkeeper.

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Efficiency: Acuity Scheduling

Landlords?

This post is for you.

As an employee of my local Landlord Association, one of the biggest sources of stress I hear about is scheduling showings. Scheduling individual showings of units, just to have the prospect not show up is a stressful waste of time. Unfortunately it is a necessary step in getting the unit rented, no matter WHEN you perform it. I have a solution to automate this and make it smoother and less stressful.

Enter Acuity Scheduling. A Squarespace company, boasts "No More Scheduling Hassles" and I agree. I use Acuity in my business and it makes scheduling appointments easy for me and my clients. I know it will make showing a vacancy a breeze for you landlords. Easy to use, you can set Acuity up to have multiple people choose a showing of your own choosing. For each vacancy you have, you will want a separate appointment type for.

It will send them reminders for you so they are always aware and you can add screening questions that they have to answer before they can confirm the appointment. Acuity can be configured to send multiple reminders on the day of the showing so the prospect can make the showing. No more calling and texting to confirm.

This online scheduling integration can solve 2 birds with one technological stone. If you are self-managing and want to add some ease and automation to your business, I highly recommend Acuity Scheduling. For more information on or to get started with Acuity, click HERE.

For help setting up your Acuity for showings or find out more about how AMH can help smooth our back office administration wrinkles, schedule your consultation HERE.

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What Bookkeepers Want Small Business Owners to Know

Being a bookkeeper is not a glamorous job. There are no fancy products to really showcase the value the service brings to all business industries. Part of my job as a bookkeeper is to educate my clients on the key reasons why professional bookkeeping is so crucial to the overall success of their business.

Below are 6 of these reasons.

1. Accurate and organized financial data is NECESSARY.

As a business owner, it is your job to keep financial accurate and organized financial records. Those records can tell you how well the business is doing, where the money is coming from, and where it is going. Aside from the obvious, it can help you should there be an audit. Being able to clearly explain any transaction at any given time can potentially save you tens of thousands of dollars.

2. Proper categorization of the Income and Expenses.

For tax purposes this is particularly important because getting it wrong can mean an audit, over or understated income and expenses, missed deductions, and overpayment or underpayment of tax liabilities.

3. Timely reporting of sales and payroll tax.

As a business owner, there are several tax reporting agencies that require timely filing and payment. Payroll and Sales tax are two of the most important and can come with hefty fines should you neglect them. Check with your local city, state, and federal government about what taxes you will need to pay for your particular industry.

4. You should maintain separate bank accounts.

In a previous blog post, I shared why, as the business owner, you should keep separate bank accounts. One reason not mentioned in the blog is that emergencies happen, even in business. Having funds set aside for such emergencies can keep the business afloat and not add any stress on the finances.

5. Backing up your books can be a lifesaver.

As a business owner who has had her laptop busted and hard drive destroyed, I can attest to how important backing up your data is. Your financial data is even more vital. Paper deteriorates over time. The ink becomes hard to read and it just does not hold up well. Not to mention it isn't secure enough most times. Invest in an online secure storage service. It will give you some much needed peace of mind.

6. Simply to make sure the data was entered correctly.

Numerical errors happen. Finding them is what is difficult. When you are frustrated with the amount of bookkeeping work to be done, these errors can and will occur frequently. Having a professional handle the bookkeeping can lower the chances of data entry errors. These errors, can cause massive issues with your financials like overstated income, understated expenses, meaning you are paying more taxes and getting less deductions and no one wants that.

AMH can handle those books for you. This is my passion. Let me help you AND your business!

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How to Avoid Communication Pitfalls in Your Property Management Company

While scrolling through Facebook this afternoon, I came across an interesting question in a Property Management group I am in. It asked "What do you feel is the number one service lacking in Property Management?" My answer was communication along with several others responding in similar fashion. I want to elaborate further on my answer. I felt there was a breakdown in communication as it pertains to the responsibilities of the owner and those of the property manager.

  • Who is doing what?
  • What does an owner need to provide to the PM in order for the PM to do his or her job more effectively?
  • What does he PM need to provide to the Owner to give peace of mind to the Owner that the PM is doing the job as promised?
  • Aside from rent, what other deliverables is the PM handing the Owner?
  • Are they timely?

These are just the few of the questions a PM firm can ask Owners and vice versa.

Another side of the communication coin is that of PMs to their maintenance staff. This was another issue brought up in response to the question above. Finding good maintenance staff is a wonderful addition to a PMs process and value added to Owners. It is my opinion that the reason so many PMs are finding it difficult to maintain good Maintenance support is again, a lack of communication as also workload.

  1. Clearly defining what you expect out of your Maintenance staff.
  2. When you expect it.
  3. How they are to report completed tasks to you.
  4. Have the workload available to make them feel productive and valued. If you can't, refer them out to others who need help.

Also, communicate routine maintenance to your tenants. Give them 24 to 48 hours' notice of a scheduled maintenance visit.

  • Who oversees the Maintenance Department?
  • Is there an on call schedule for those late night emergencies?
  • What is the workflow process like?
  • How does the maintenance team communicate with each other and the PMs?
  • Will they have access to Owner?

These are questions that a PM firm should be asking when taking on an in house or long term contract with a Maintenance team. Of course, these are aside from the obvious questions regarding their ability to do the job.

The best way to avoid these communication pitfalls is to ask these questions during the signing phase of your meeting with owners and maintenance technicians.

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QuickBooks for Property Management – Security Deposits

Security deposits are paid by the tenant to the landlord. It is meant to cover any damages done to the property by the tenant beyond normal wear and tear. As landlords, I am sure this is not news to you. What may be news to you is how to handle these payments in QuickBooks. I am going to share the method I recommend because of its ease of use.

When receiving a security deposit from a tenant, I treat it as a credit to the tenant. I do this because it allows me to see, at any given time, how much their deposit is and it makes it easier to discern how much of it needs to be returned to the tenant after any charges have been accessed.

To use this method, Tenant CANNOT be set up as jobs under a property address. They MUST be set up as a customer. Under these conditions, tenant security deposits are handled with the following steps:

  1. Receive the payment - There should be no invoice to apply it to.
  2. Deposit the payment - Tenant Security Deposits SHOULD have their own bank accounts. Some states require this. I think it is just good practice to keep them separate and never commingle the funds.

To return a partial:

  1. Using the Enter Statement Charges feature - Enter all the charges for cleaning, carpet cleaning, painting, etc.  Enter these as positive amounts and it will decrease the amount of the credit sitting on the tenants record. Once all the charges are entered, any remaining amount listed in red as a negative on the tenant's record is due to the tenant.
  2. Write a check from the Security Deposit account for the amount of the remaining credit on the tenant's record, in the expenses and items section below, choose AR and then choose the name of the customer you are refunding and then click save. This zeroes out the tenant's record and you can then make them inactive.

After the tenant has been closed out and made inactive in your QuickBooks, you can then list that unit as vacant and work to get it rent ready. How easy was that?!

For more information on how this works or to receive some training on processing your tenant security deposits this way, schedule your consultation today! AMH Bookkeeping, LLC……The Landlord's Bookkeeper.

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Employee Onboarding

Just like with new clients, you must onboard your new employees as well. Reading a job description and explaining the job duties to the new employee is not always efficient in acclimating the new hire.

Aside from explaining the duties and assigning them a work area, there are quite a few things that can be done to ease the transition for your new team member.

1. Walk them through accessing their company email. - I know it sounds trivial but this can be so frustrating some times. Walking him or her through this step will help ease some of the nervousness from their minds.

2. Sit with them and give them a short tutorial on any software you use to run your business. - Most people are not up on the latest software or applications so learning a new program is stressful! Trying to navigate it alone!? YIKES! Giving your new hire a hands on tutorial shows them that you understand that learning a new program is difficult and that you value their presence. Yes, I know you can point them to YouTube but your sitting down with them will go a long way to instilling loyalty and a sense of belonging in them.

3. Check in with them. - Once a week check ins during their first 90 days can actually help increase their productivity. You can answer any questions or concerns they have, direct them to the company wide resources, introduce them to key members of the team, let them know who to go to for particular pieces of information or questions. Work them into the culture you are trying to build within your company.

4. Time cards. - How do they submit their time to you for payment? This is a BIG one. Of course you want to know how long they worked and what they worked on and the new hire wants to be paid. How does this process work? What is the payment schedule?

Don't let your virtual business stop you from employing these procedures. Video conferencing software like Zoom have made it easier than ever to chat with your virtual employees and hold weekly meetings. You can share screens, write notes, chat, and even record for future reference. There are also apps like Slack or Microsoft Teams that combine file sharing with team messaging and video conference capabilities that will not only increase your performance within your business but also within your team.

Brick and mortar or virtual, your business will thank you when you implement these procedures to onboard your new team members.

If you are ready for this step or are thinking about your first hire, schedule a call with AMH and ask about our Tailored COO program.

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Leases: Why They are Important

I am sure this is common place but believe it or not there are still landlords operating without a lease agreement.

What is a lease agreement?

A lease agreement is a document that outlines who is living in the rental unit, how much the rent is, when it is due, and the rules regarding the use of the unit. In addition, the lease agreement details what the deposit is, what utilities will be paid by the owner and the renter, how to send maintenance requests, and how to give notice when moving before the lease is up.

This document is important because it lets the tenant know what to expect, how they are to maintain the property, and what happens if the rent is late. It serves as a layer of protection for both the tenant and the owner. Aside from telling the tenant how he or she must behave while occupying the unit, it details how the landlord is to behave while the tenant is in occupancy.

The landlord is to provide the tenant with notice 24 hours prior to entering the unit for non-emergencies, how to handle the security deposit after the lease has ended or tenant has moved, and how long they are to safely and securely store your items should have difficulty getting help moving them.

The lease agreement is a contract and any breach of it has consequences for the party responsible for the breach. Landlords and property managers, a great process to implement with prospective and renewing tenants is to go through the lease with them section by section. Make sure they understand what is being said in the document so that there is no confusion. Have them initial each section to indicate they have read and understood its purpose. This process will start to slow down the amount of infractions and create a dialogue between you and your tenant that will establish a set of expectations on both ends. The tenant will you see as professional and fair. You will see the tenant as reasonable and responsible.

In addition to the lease agreement, you can addenda that explains the nuances of your business. For example: Pets, pest control, and the move-in/move-out checklist. I will talk about the checklists in another post.

If you find yourself without a good lease and reside in the state of Iowa, the Iowa Real Estate Association has got you covered. For all other states, please reach out to your local landlord association, realtor association, real estate investors association, or contact an attorney.

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