Rent Collecting 101: How to Get Your Tenants Pay on Time
Renting out a property is one of the most lucrative businesses today — as long as you get paid every month. You must be aware of the stereotypical norm about “renters not paying on time”. At some point, landlords will likely have good tenants to keep and a couple of ones who are always behind on their rent dues or not even paying at all.
Late payers can have a negative impact on your business cash flow. Hence, something needs to be straightened out if you think some of your tenants are almost 60 days past on their rent.
For many landlords, evicting late payers from their property is the most effective course of action. Whilst it can be a great option to resolve the issue, eviction should only be used as your last resort unless you are confident to have them replaced immediately.
Leaving your rental spaces unoccupied for a long time can hurt your profit in the long run, which is why losing tenants is the last thing you want to do. So, how do you get rid of late payments?
Here are efficient tips on how you can turn these late payers into responsible tenants:
Set up an automatic rent payment.
Many rental properties and real estate agencies are now collecting rents/mortgages through an automated system, where payments are automatically deducted from the tenant’s bank account on a standard monthly basis. This policy works if you own at least 20 or more units and you Another major advantage of requiring the auto-pay system is to keep your tenants pay on time.
You can set up an auto-pay system through ACH (Automated Clearing House) direct deposit, online bank transfer or post-dated check issuing.
Give considerations with equivalent consequences.
If tenants make a late payment for the first time, it is okay to consider whatever acceptable reasons they have for paying late. Some landlords are providing grace periods as long as the tenant submits a promissory note. But, you must let them know that there are equivalent consequences they need to deal with should they fail to make a payment again.
Depending on your state leasing rules, landlords can either report past-due tenants to a credit agency or enforce additional charges to late payments. Applying these sanctions will persist your tenants to pay on time.
Choose your tenants wisely.
When accepting prospective tenants, you must set your criteria to make sure that they won’t give you pain in the head later. Be very clear about your point of reference. Ask for an up-to-date credit report to check which prospects are current with their credit repayments and which ones are likely to stay behind on their rents. You can also have income requirements to make sure they have sufficient means to pay on time.
Email payment reminders.
Remind your tenants about the rent due at least 3-5 days prior to the given due date or grace period. Send a complete computation of bill via email or text to eliminate factors of human error such as forgetting to make a payment on time or within the provided grace period.
Reward your responsible tenants.
Many landlords are too busy focusing on past-due tenants and how to keep them reminded about their rent dues that they almost forget to appreciate those responsible renters who are actually making their business worthwhile. For tenants who never miss making their payment on time, following your property rules and regulations, and taking care of their unit, reward them with something that will show how they are appreciated. A fruit basket, a grocery stash, or a gift card will do. Who knows this might also motivate late payers to improve their payment history and take advantage of these reward benefits.
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