Owning one or several rental properties can be a profitable business. After all, they allow you to earn a steady passive income while growing your equity over time. However, many landlords struggle with collecting rent.
There are many reasons why tenants don’t pay rent on time, from financial hardships to simple forgetfulness. Luckily, there are many strategies you can use to ensure you get your money on time, every time. Whether it is to enforce late fees or send reminders before the due date, you can read more about these rent collection tips below!
Top Rent Collection Strategies
Rent collection doesn’t have to be complicated! Here are nine simple strategies you can use to always get on-time payments from tenants:
Screen Tenants Thoroughly
The best way to ensure you get paid on time as a landlord is to find trustworthy long term tenants. That’s why a comprehensive screening process that includes credit, background, and rental history checks goes a long way.
By screening tenants, you can verify that your renters have the means to pay rent every month. Plus, a credit check will let you know whether they tend to make payments on time. This can highly minimize the risk of late or missed payments down the line.
Add the Rent Collection Terms to the Lease
One of the main reasons why tenants forget to pay rent on time is because they aren’t sure of how or when they should make the payments. Luckily, this can be easily fixed by adding a clause to the lease related to rent payments to the lease. This way, tenants will know:
- When rent is due
- How to pay rent
- Who to contact with payment issues
-
Any fees or penalties for late or missed rent payments
With these described on the lease, tenants will better understand their financial obligations and the potential repercussions of failing to meet them. This will save you many issues when it’s time to collect rent.
Accept Several Payment Options
Different tenants have preferences when it comes to payment options. For some people, writing a check might be easier than paying online. That’s why, offering several payment methods to tenants, when renting out your property, increases your chances of getting paid on time.
Payment methods you can use for rent collection include online payments, electronic transfers, cash, and traditional checks. You can also set up automatic payments. That way, the money will be automatically withdrawn from your tenant’s account, and you won’t have to worry about late or missed payments.
Offer Incentives
You can flip the script and try to make paying rent something positive by offering incentives for on-time payments. This could be a moderate discount on the next rent or a small reward. Having something to look forward to can significantly encourage renters to pay on time.
Enforce Late Fees
If a friendly approach doesn't work, you can try enforcing late fees to encourage renters to pay on time. After all, no one likes to pay extra money on fees that could have been easily avoided.
When enforcing fees for late payments, you need to outline the terms in the lease. Explain how much you’ll charge and how much grace period tenants will have. This way, it’ll be easier to enforce late fees.
Send Automatic Reminders
Good communication can significantly improve the rent collection process. Sometimes, tenants just need a friendly reminder to pay rent on time. Luckily, you don’t have to spend a lot of time sending reminders through email or text messages to your renters each month.
Instead, you can automate the reminders to be sent a few days before the due date. This will help you get your money on time while also strengthening the relationship with your renters.
Make Credit Reporting Available
Landlords have the ability to report rent payments to the credit bureau. Knowing that paying rent late can negatively affect their credit score can incentivize tenants to start making punctual payments. It will also decrease tenant complaints by showing them you are on top of the finances.
Additionally, this can be a positive thing for renters who always pay on time, as their good financial habits will translate into a better credit score!
Address Late Payments
If a renter is late with rent, make the time to discuss the issue with them as soon as possible. A simple chat can help you find a solution or even come up with an alternative payment plan that better suits both parties.
Moreover, this approach can help you strengthen the relationship you’ve built with your renters. In the long run, this translates to longer tenancies and a stable source of income for you.
Hire a Property Manager
Getting the hang of the rent collection process takes time and effort. If you’re a first time landlord needing advice, it might be convenient to work with a seasoned professional. The same can be said if you own more than one rental unit.
There are many rent collection services you can use, but hiring a property manager can go a long way. The professionals can help not only with rent collection but also with all other aspects related to the management of your rental property.
Bottom Line
Collecting rent doesn’t have to be overly complicated. There are many strategies you can use to ensure you get your money on time, including screening tenants, enforcing late payment fees, making credit reporting available, and sending reminders close to the due date. Now that you’ve learned about these strategies, you can put them in place to ensure you get on-time payments, every time.
Don’t have time to chase tenants for payments? Contact Ridgewood Property Management! Our team of seasoned professionals will streamline your rent collection process so you can get your money on time, without the hassle.
