I'd like to try to get my current tenants to pay bi-weekly to increase my cash flow like Mr. LL suggests. Has anyone used any letters/flyers to send out to current residents? I'm lousy at that kind of stuff. Here's what I have so far. Thoughts?

Dear Resident,

Do you get paid every week or every two weeks? Would it help you to be able to pay your rent every 2 weeks instead of monthly? If this sounds appeal and convenient to you, please give me a call and discuss this!

____________

Justin, It's gotta be a no-brainer for the res.

"Dear ______,

Starting Jan 1, you may customize your rent payments with our new PayDay Plan. Simply match your rent payments to your paycheck! Split up the month into bite sized pieces for easier budgeting. No more saving up or getting paid AFTER the due date.

To take advantage of this great program, simply initial next to the PayDay Plan that's right for you, sign, and return in the enclosed stamped envelope. Easy!

(if we do not here from you, things stay the same!)

____ $500 per month, due on the 1st

____ $265 twice a month, due on the 1st and the 15th (x 24)

____ $260 bi-weekly, every other Friday starting _______ (x 26)

____ $135 weekly, every Friday, starting ____.

To make your life easier, we now offer Autodraft - no more running to avoid late fees, no more stamps, no more money orders...we simply deduct the rent form your checking account.

Simply sign the attached form and enclose a cancelled check or deposit ticket showing your account number.

Hope to hear from you soon!

Signed X

Manager"

Oops, after weekly add (x52).

Please note we add $10 to each payment to cover our extra handling.

Please LOVE this! You should get some good response. save up the extra income and buy a Corvette!

Give them the numbers. They will not call. Most people are deathly afraid of math and feel dumb.

One thing to work around: rent is always paid in advance. If they get paid the first Friday, Jan 4, I'd not worry about the 3 missing days and just roll with it.

If they get paid Jan 11, you'll have to work out how to get caught up. I suggest they pay $166 for 10 days on Jan 1, then start the bi-weekly program on Jan 11. Maybe insert that into the price list to avoid confusion and phone calls.

____ $260 Bi-weekly, every other Friday starting Jan 4

____ $260 Bi-weekly, every other Friday starting Jan 11 (Pay just $166 on Jan 1 for Jan 1 -Jan 10 rent, then start the bi-weekly program)

Rangor: Nashville, how about you?

"they are too stupid to know that there are more than 4 weeks in a month. "

Don, in my opinion, it is important that you fully educate residents about their options. You should never come across in their eyes that you are hiding anything from them. If residents feel that you were misleading or trying to take advantage of them, that will only eventually come back to bite you.

We have many who take the twice a month option. Salaried folks are often paid on the 1st and the 15th.

$500 per month, $265 every two weeks is serious gouging of the tenants. Even proposing such will come back to bite you.

I know that most tenants will not always be honest with me- and hardly any will be at move-out time. But I must be honest at all times if I have any expectation of honesty from them-- or if I do not want to get trapped by a legal-aid lawyer after they move out.

This is great information!

I'm trying to combine this with a $75 discount if rent is paid on time. I only have this discount in my more recent leases. I think I'll have to change it to $80 discount so I can cut it in half. I may be making this overly complicated by combining the two.

So:

"$580 per month, due on the 1st, there is a discount of $80 if rent is paid on/before the 1st ($580 less $80 is $500)

"$325 twice a month, due on the 1st and the 15th ($2(x 24). $265 if rent is paid on/before the 1st and 15th respectively.

"$300 bi-weekly, every other Friday starting January 4th or January 11th (YOUR choice!. $260 if rent is paid on/before Friday (x 26)

Thoughts?

Opinionated - The way I'm reading Brad 20K's example the $265 option is only $360 more per year than the monthly option since it is only paid 24 times per year (twice per month) and not every 2 weeks. The way I've calculated the four options semi-monthly is 6% more, biweekly is 12.6% more and weekly is 17% more.

I don't know where good business ends and gouging begins, but I guess I've decided that if the tenant understands the extra costs involved in the option that best meets his/her needs then I'm good. They've made their decision with full knowledge and nobody can level the charge of dishonesty.

The residents LOVE it. It helps them survive.

LLs are long term thinkers. Many folks are just trying to get to the next paycheck.

We have some who sign up for the regular monthly then call back later and ask to go bi-weekly.

The way money is handed has changed.

Justin, In my limited experience with marketing customers need it to be simple. If it is too hard to understand or involves too much thinking they won't bite on the sale.

Lisa, agreed completely on the paycheck! The $75 has worked for me when it comes to monthly payments. I wonder if I could combine them but probably not or maybe just ask them "would you like to pay monthly or every other week?" and have two different leases depending on the question (bi-weekly has no discount, monthly does)

I understand the concept but just can't grasp why anyone would do this - and yet my tenants all have RentACenter trucks at their homes routinely and several have the buy here/pay here weekly car payment places. Yup, some also go to check cashing services because they don't have bank accounts or else their bank puts holds on checks.

Jeffrey--As far as bi-weekly payments as opposed to paying 2x that amount monthly--I believe that most people that go for this (whether it is rent or mortgage payments) do so because they don't realize that there are more than 4 weeks in a month. Failing to point this out to them is not deceiving them; it is not my duty to explain the mysteries of the Gregorian calendar to them

Lisa--I agree; too many options confuses the decisionmaker and causes paralysis.

Late: $5 per day late fee

Vision: Give people what hey want and let them lay you for it.

Example: Wifey and I don't drink milk. No kids at home and no cat. We just use it in recipes so a gallon would go sour.

Rather than buy the economical $3.75 gallon, we choose to buy the $1.75 quart. That equals $7 per gallon. Why? It suits our needs and our life patterns.

Early payment discount: no necessary with this program, especially when combined with autodraft.

and Deanna hit the right point: rent is no longer about the month or calendar pages or cycles of the moon. It's about the weeks.

don, since you do not actually offer bi-weekly payments, I'm not sure your understanding of what residents realize is accurate (especially as they begin making their payments). The point is, as Brad mentions, residents do get it and even if you take time to clearly point it out to them, even when they realize how the plan works, some will still PREFER the biweekly option and LIKE it!

There is a reason there are so many "disclosure" laws related to payments in the financial industry. Because, yes, the RIGHT thing to do is to explain to people what they are paying. And in the long run, that is to YOUR advantage. Because when people know and still CHOOSE the Biweekly plan they prefer, your rental relationship is on a much stronger foundation, because no one will later feel that they were tricked.

I have been sharing this strategy for decades, and I have learned the hard way, the importance of making sure everything is clear; residents will stay in your rentals FAR longer and happier which is my goal, including the ones who prefer to pay bi-weekly.

Another analogy. Like many of you, I have some 30 year mortgages, and some for shorter time periods, even as short as 10 years. On the 30 year plans I pay far more overall in the long run than I do on the 10 year plan. However, with the 30 year plan the payments are in smaller bites. And even though I realize that I'm paying more in the long run, I (like many of you) most often still CHOOSE to go with the 30 year plan. Why? I dare say it is simply because that plan was initially presented to me as the "standard" plan.

Several years back, 15 and 20 year mortgages became popular for a while. Why? Because lenders became more aggressive in offering them as a standard option. When lenders stopped aggressively offering that option, they became less popular.