Hi guys Just generally asking how frequent do you receive rental payments? Currently twice month for 1 and at the end of the month for other. Is there really no difference? Pros and cons? Thanks Ryan
Depends on what's in your management agreement and what the Agency can do for you. At a minimum, it's normally once a month, with disbursements made on the 1st-5th of the following month (inline with AFA and OFT guidelines). Some Owners want twice monthly disbursements, in which case a second one is done on the 15th of the month. Some want weekly, some agencies do this. There's no real reason why they can't, however most agencies will use a bulk payment processing through their bank and every transaction process carries a fee. Obviously the more payments made (frequency) the higher the administrative cost is to the business/consumer.
The benefit IF someone was to immediately put the fortnightly net rent into a offset and obtain a two week benefit would be around $60 a year. And it doubles paperwork. I often see agents who pay FN do retentions because they know an appliance replacement etc wont be covered by a two week rent period. I would argue the $6 fee many agents charge per payment will outweigh any apparent benefit. You would make more money stealing toilet paper at work.
Different softwares will have different capabilities and different offices will have different workflows. Eg we give people the option of monthly or half monthly. Majority choose monthly and i think that gives the smoothest amounts. Benefit of half monthly is that bills get paid sooner if you have the PM paying bills on your behalf. Downside is, often need to withhold money to pay for things as half a months rent isnt usually enough to cover them.
Thanks for the input guys. I think I will change my fortnightly payment to monthly. Seems logical way. Cheers
I would personally (and I do) ask for fortnightly/bi-monthly. It’s better having the money sitting in the investor’s offset account saving interest than in the PM’s trust account. It might appear negligible in the short term, but the compounding effects over many years and many properties would be significant. - Andrew
I got 2 properties with 1 PM. 1 IP is weekly, the other is monthly. No idea why, but doesn't bother me at all.
I can't shine any light why the agent would transfer weekly other than this mirrors the tenant payments and has been set up the same way. Fortunately/unfortunately you become acutely aware that a payment is late if it is a weekly cashflow item.
Both my agents pay me bi monthly. I honestly can't even remember being asked about it. Perhaps in the light of some of these comments, I may ask them if it's costing me more!
Some are supposed to be 6 months in advance, but I asked the tenant not to pay until July so it will be once a year. The advantage is paying tax at a lower rate. The disadvantage is you don't have money to reduce the interest accruing and opportunity cost ( producing more income or assets).
