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Author: MNU34 One star, 50 posts Old School Fool Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 24253  
Subject: Automated periodical transfer Date: 10/20/2012 7:12 PM
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I bought some real estate in the US and I am trying to reduce the admin work.

In Germany it is very common to set up periodical transfer automatically, so that you do not have to do anything to get your monthly payments like rent wired to your landlord.

I do not recall to have used this when I lived in the US about ten years ago.

I assume this feature must exist, but what do I need to tell my tenants they have to tell their bank to do or look for in their online banking?

(PS: The money will flow from a US account to a US account)

Thank you & BR from Munich.
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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 24208 of 24253
Subject: Re: Automated periodical transfer Date: 10/21/2012 12:49 AM
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MNU34,

You wrote, I assume this feature must exist, but what do I need to tell my tenants they have to tell their bank to do or look for in their online banking?

For your tenants, we have something called online (or electronic) bill-pay. There is a related service called e-bill or bill-presentment. These are services banks offer in the states. http://en.wikipedia.org/wiki/Electronic_bill_payment

Bill-pay is a service banks usually have to buy from a 3rd party processor - though a few like Citibank I believe have their own in-house service. Bill-pay usually uses a system known as ACH (automated clearing house) to transfer funds between accounts. This feature allows the 3rd party service to pull funds from the customer account and direct it to a payee's account (sometimes the bill payer service will run the funds through their own account first). But if the payee is not well known to the payment processor, the bill pay service simply sends a paper check.

The way bill-pay works does not depend on the payor knowing the payee's bank information. In fact, most potential payees would receive a paper check. But bill payment services contact frequently used banks and major commercial vendors and merchants to obtain their banking information in order to expedite payment processing. As far as I'm aware, the selection of available electronic payees is not under the payee's control. The bill-pay service will contact you when the volume of checks becomes significant enough to get flagged in their computer systems. However assuming you are not a major US merchant, I don't think you'll find any way to get a payment processor to work with you.

With that said, some banks do offer automated recurring electronic transfers; but I think those are usually between accounts with the same institution. Finally, some commercial U.S bank accounts will offer a feature that allows a company to set up recurring payments/deposits from the company's customer's account.

FWIW, no one "wires" rent to a landlord here. Some landlords might have auto-draft arrangements and a few will process a credit card. Most people just set up a recurring bill payment with their bank. There are almost certainly some large commercial and apartment management firms that are set up to receive payment by ACH from payment processors - especially the bigger REITs that manage a lot of rental properties. But if you're a small landlord, you're probably going to have to manually deposit paper checks.

Wire transfers here are generally confined to large money transfers. Usually for things like real estate purchases or when transferring something like a brokerage account.

BTW, some US banks will let you deposit checks by sending in a photo of the check using their cellphone app. This might be a reasonable way for you to handle this end of the problem. You just endorse the back, open the app and take a picture of both sides. The bank doesn't actually need the paper check to process the deposit - just an image of it.

Regards,
- Joel

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Author: MNU34 One star, 50 posts Old School Fool Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 24209 of 24253
Subject: Re: Automated periodical transfer Date: 10/21/2012 3:59 AM
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Hello Joel, thank you a lot for your extensive explanation.

I understood that the bill pay feature, takes a way the hassle from the tenant, but would still result into the landlord getting a paper check.

This is really amazing, that not much has changed in transactional banking (other than paypal) in the US.

I assume it is difficult to change legacy systems/habits. In some countries (e.g. Brazil) I have seen real time wire transfers between institutions for tiny amounts. In Europe we still have batches at night... Must be some guy in India typing ;-)...

BR,
MNU

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Author: stevenjklein Big funky green star, 20000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 24210 of 24253
Subject: Re: Automated periodical transfer Date: 10/23/2012 9:42 PM
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I understood that the bill pay feature, takes a way the hassle from the tenant, but would still result into the landlord getting a paper check.

There is another option. Chase has a feature called QuickPay that allows person-to-person transfers, so long as one of the parties has an account at Chase.

More details here: https://www.chase.com/index.jsp?pg_name=ccpmapp/smallbusines...

I'd be surprised if there isn't something similar offered by other banks.

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Author: UKBB Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 24211 of 24253
Subject: Re: Automated periodical transfer Date: 10/27/2012 8:46 AM
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Could you use paypal?

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