Did you know that around 20% of renters in America are behind on their payments? A typical renter is nearly four months behind on monthly rent payments, including late fees and utilities. In total, over 10 million renters in America owe their landlords around $57.3 billion.
While every landlord dreams that their tenants pay rent on time every month, collecting rent can be very challenging. If you are struggling with rent collection, there are several things you can do to encourage your tenants to pay rent on time.
Here are some tips on how to collect rent on time every month.
Use Online Payments for Collecting Rent
Money orders, cash, paper checks, and other outdated ways of collecting rent have several problems. Since mail can get lost or delayed, you may not receive your rent on time. Today, several people across the globe pay their bills and expenses online.
Therefore, it may be ideal to allow your tenants to pay their monthly rent online to streamline the process. Property managers have various apps and platforms where tenants can pay their rent online.
Online rent platforms also have accounting tools that automatically set late fees, schedule upcoming payments, and send invoices. This helps landlords track their rental income and makes managing property easier.
With online rent payment methods, tenants can quickly and easily submit their payments. This helps in avoiding the hustle of writing and sending checks or money orders.
Talk to Your Tenants about Late Rent Payments
Talking to your tenants to know why they aren’t paying their rent on time is crucial. Sometimes, tenants fail to pay rent on time because they are unaware of the payment policies or have financial constraints.
Therefore, if your tenant is consistently paying rent late, get to know why they are late, when they will pay, if they will pay the rent in total, and the payment method they will use.
Also, ensure your tenants understand your rent payment policies, including due dates and the consequences of late payments. Having straightforward communication will help avoid confusion.
Do not forget to keep a record of your correspondence because it will come in handy in the event of an eviction.
Send Rent Payment Reminders
The growth of technology has made communication easier. Today landlords can get in touch with their tenants quickly. To ensure you collect on time, consider sending rent reminders at least five days before the due dates.
Property managers have handy management software that can automatically send reminders to tenants each month. In some cases, you can choose to send custom reminders to each tenant, including the amount due and any other debt they have.
Since such platforms are automatic, there is no risk of forgetting to send reminders or sending late reminders. Your tenants will receive a reminder in good time.
Have Penalties for Late Rent Payments
Several landlords or property managers charge late fees for late payments. Late fees are meant to encourage tenants to pay on time. Since the state government regulates late fees, it is crucial to check your local landlord-tenant laws and know how much you can charge your tenants for paying rent late.
Late fees aren’t meant to punish tenants or impose an even bigger financial burden on them. To ensure tenants and landlords are protected, some states limit how much a landlord can charge in late fees.
A landlord should also allow a grace period for their tenants before charging the late fees. Ensure your tenants know your rent collections policies, how much they will pay in late fees, and also the consequences of consistently paying their rent late.
Rent Concessions for On-Time Payments
Encourage your tenants to pay rent on time by having some rent concessions. Since there are consequences for late payments, having a reward for paying rent on time is also crucial.
Some landlords offer some percentage off on rent for tenants who pay their rent before the due date. Paying rent on time reduces several hiccups and also boosts a tenant’s credit score, especially if they use an online payment platform.
Rent management platforms allow landlords to set up systems that report on-time payments to major credit bureaus. This can give tenants a good credit score and encourage them to pay on time.
Screen Your Tenants
It is vital to screen your tenants before leasing your property to them. Knowing crucial details such as your potential tenant’s source of income or their credit score can help avoid payment delays.
If possible, ensure you request a credit reference, check their criminal history and verify their employment before signing the lease. Professional property managers conduct legal background checks on tenants and can also reach out to their previous landlords.
The screening will ensure you only have the right tenants on your property and minimize risks such as late rent payments and more.
Hire Property Managers
While it is the right of every landlord to collect rent from their tenants as per the lease agreement, there are several things they cannot do. For example, according to the landlord-tenant agreement, a landlord cannot lock their tenant out of the property without notice.
Since there are several laws to adhere to, it may be best to work with a property manager. Apart from ensuring your property is in a good state, property managers also help collect rent.
Professional property managers understand the laws in their state and will handle everything, including eviction, as per the law. They will help you have and uphold solid policies and communicate with your tenants to ensure they pay rent on time.
This will save you from the stress of managing your property and tenants and give you a good ROI.
Collect Rent with Confidence Using Property Managers
Watching rent roll into your count every month without fail is one of the most rewarding parts of being an investor. However, several things can cause your tenants to pay their rent late. To get the best out of your investment, it may be wise to consider hiring a property management company to help in collecting rent.
Talk to our experts here at Reedy & Company if you want to maximize your profits and enjoy a stress-free rent collection process. With over 40 years of experience in property management, we will help you avoid late rent payments. Contact us today to learn more about our services.