Rent is one of the most basic aspects of rental property. You, the landlord, have a property that you allow your tenant, a renter, to reside in for a fee. Your tenant moves in, cares for the property, and presents you with payment – on time – each and every month for the duration of the lease.
While it should be this easy, collecting rent can sometimes be seen as a chore. So, if you find yourself struggling to collect rent each month, having to follow up with tenants, and constantly getting late payments, perhaps it is time to start doing things a little differently.
Here are some tips on how you can collect the monthly rent on time.
Tenant screening process. It goes without saying that responsible, reliable tenants will pay on time. If you have done a thorough tenant screening process, you should have an idea going in whether or not your tenant will be one that will pay on time or one that may cause you trouble. If you are constantly encountering tenants who don’t pay rent timely, consider changing your screening process.
Offer rewards for on-time payments. For those tenants who consistently pay rent on time each month, reward them with a gift card to a local store or restaurant. It doesn’t have to be much or often, but a small token of appreciation goes a long way.
Provide various methods to pay. While accepting cash isn’t always recommended due to the lack of payment trail, you want to offer your tenants options when it comes to paying their rent. The idea is to make rent payments easy to make, such as through an online portal, app, or another electronic method. Physically requiring a tenant to bring money to you, mail it, deposit it into your bank is likely going to result in frequent late payments.
Charge a late fee. As with everything in life, there are consequences. The same rule should apply to rent payments. Giving a grace period is fine, but if your tenant doesn’t pay rent by a certain number of days after (as established in the lease), there should be some sort of penalty or late fee. Knowing that they will be responsible for the payment of additional funds may make your tenants more likely to pay on time.
Keep the lines of communication open. Life happens and sometimes things will get in the way of paying rent. You may have tenants who always pay on-time who find themselves in a struggle one month. If you are approachable, your tenants will be more likely to reach out and explain what is going on and allow you both to come up with a plan.
Many landlords struggle with rent collection. They often find themselves being too lenient with sob stories and not enforcing penalties. This practice will lead to habits of late payment from renters – and breeds a vicious cycle.
Set clear expectations within the lease and verbally discuss them. Present your tenant with options and make paying rent a breeze. Should you find yourself too frustrated or stressed to handle the rent collection and all that comes with it, you may want to consider looking into a property management company.
Marina Shlomov, a managing partner at ALH|Podland Rental Homes Property Management is the author of many articles on Landlording, Property Management, and Real Estate Investing. A residential builder in the state of Georgia since 1999, Marina is an investor herself. Her property management company is intended “For Investors” and “By Investors” for a simple reason – she knows what investors’ goals are and she works hard to reach their goals. In her spare time, Marina likes to spend time with her family, friends, garden, read and travel. Check her out atwww.alhpodland.com. You can find Marina’s articles and comments at @rentalhomesatl on Twitter, on Facebook, Google+, Blogger. and YouTube, Bigger Pockets and REI CLub and LinkedIn.