Rent Collection Tips and Strategies
Life as a property manager/landlord can be difficult in terms of rent collection. Dealing with tenants and issues that may arise can cause difficulties in obtaining the funds needed to pay the mortgage on the property. Recognizing that your biggest challenge will be collecting rent payments on time, below are some tips and strategies to help with rent collection.
First things first, make sure you are renting to reliable and trustworthy tenants. The first step to timely rent collections involves selecting tenants with a good background check and great credit report. Obtaining good tenants involves very little effort on your part if you use a tenant screening service, prior to renting to an individual and their family. This type of service is usually less than $50 and will supply you with the history, credit report, background, criminal record, and past payment information of the individual you are screening. This process takes very little time and financial commitment and you can be confident in the results provided.
Now that you have reliable tenants, make sure to set up an automatic payment system with them. This system can be through an ACH deposit (automated clearinghouse) that automatically drafts the amount every month. You can also have the tenant set up an auto bill pay account through their bank to your bank and ensure that you are paid on time every month, even if they forget. This system can be set up at the beginning when they are signing the rental contract and will ensure timely rent collection.
Do not accept cash for rent payments. This process does not leave a paper trail and can be disputed in a court of law if you don’t have any receipts or other documented proof of payment. It is not a good practice to accept cash, because it can be lost and could mean the money is coming from illegal means. State in your contract that they can pay via check or money order and that cash is not accepted.
Have a policy and stick to it! Clearly, write out your rent collection policy, in terms of due dates, grace periods, amount required and any late fees associated with late payments. Stick to these policy guidelines and have your tenant refer to them if you run into any problems. This does not mean you can’t be lenient in terms of an unexpected circumstance, but make sure that you are not taken advantage of during business transactions.
Let your tenant know about the consequences if they are not paying their rent on time and not getting in contact with you on the details of why they cannot pay. Let them know that if they are late and not able to pay, they may be reported to the credit bureau and after 60 days of no payment, they will be evicted from the residence. Have all of these rules placed in the contract and be sure to remind them of the consequences if they are not able to pay rent on time.
All of these guidelines can help you in getting the best tenants and best chance of not getting late payments. However, late payments can happen to the best of us. Unforeseen circumstances can occur and people may fall short every now and then, so make sure you have provisions in place to prevent this from happening or to rectify the problem if it does happen. ALH|Podland Realty & Rental Homes Property Management is not afraid to exercise rights for the property owners in regards to rent collection and neither should you.