Although being a landlord can be fun at times, it can also be agonizing and stressful when it comes to collecting rental payments. If you’re blessed with high quality and responsible tenants, a rental property is a great way to have a constant monthly income. However, if you’re not, you’ll have the challenge of struggling every month as you try to ‘discipline’ your tenants and make them settle their dues.
Are there any ways to make rent collection less stressful and cumbersome? We’re happy to say that there are actually several ways to do just that, and here’s some tips on how to do so.
1. Automatic Withdrawal Should Be Your Best Friend
There are different kinds of automatic withdrawal, and the most popular one is the direct deposit, which we’ll discuss in detail below. Another popular method is setting up an online bill option. Your tenant would be required to have his/her bank list the rent payment as a recurring bill, on a specified date and the payment would be released to you. This method results in smooth rental collection, as the tenant doesn’t have to take time out of his/her day to pay their rent.
Post-dated checks is another option. Although it’s not as popular as the first two techniques, it’s also an effective method because the tenant will write several checks that are good for a year. The landlord will collect these checks ahead of time, and simply deposit the check each month.
2. Have You Considered Direct Deposit?
Direct deposit is the most popular way to receive rental payments in a timely manner. However, this method comes with a transaction fee. In situations where your tenant’s account doesn’t have sufficient funds, the payment will bounce back and you won’t receive your rental payment.
The good thing about online payments though, is that you don’t have to meet your tenants every month to collect a check. In addition, your tenant doesn’t have to go out of his or her way to arrange the payment. They can simply set it and forget it, allowing for a smooth rental collection process.
3. Don’t Accept Partial Rent Payment without a Plan of Action
If you believe that accepting a partial payment would be ideal for the situation, then you should at least ask your tenant to sign a partial rent payment agreement. Your agreement should detail exactly when and how much the tenant will pay you for the remainder of the rent due. Likewise, you also have to personally serve new legal notices in case they fail to pay on time once again.
There are situations that occur, which can cause a tenant to be unable to pay their full rent on time. Try to use your professional judgment in these cases. If you’ve been successfully dealing with a tenant for many years and they come to you with an issue for one month’s rent, you should most likely hear them out and put in place a plan for them to pay you. However, if you have a tenant that constantly pays late or misses rental payments, it may not be in your best interest to be lenient regarding their rental payments.
4. Incentivize On-Time Payments and Discipline Irresponsible Tenants
Some landlords believe that by rewarding their tenants, they encourage them to always pay on time. This includes discounting the rent in case that the tenant sets up automatic payments or pays ahead of time. It’s also fair to charge a late fee for those who fail to pay their rents in a timely manner.
As a landlord, you have to stick with your rental policies no matter what. The moment you start forgiving a late fee or allow your tenant to settle his payment 5 days after his due date, then he’ll have the assumption that he can get away with this. Be firm in your rental collection. It’s important to remember that your rental property is a business. Make sure you treat collecting rent accordingly.
5. Get Rid of Those Who Have Difficulty Paying
Although it’s understandable if your tenants miss a payment once in a blue moon, once it starts happening on a constant basis, you have no choice but to evict your tenant.
Keep in mind, your rental property is your business, and it’s important that your tenants pay for your services. Don’t let your renters take advantage of your kindness. If you’re too lenient they’re more likely to take advantage of the situation. You have to make them understand that rent should be their top priority.
6. Implement and Explain Your Rent Collecting Policy
In order to have the guarantee that your tenants will pay regularly and on time, it’s best that you make your rent collection policies firm and consistent. Make sure that you include the following payment related issues in your rental agreement:
– Where rent is paid
– Exact amount due per month
– Accepted payment methods
– Consequences of non-payment and bounced checks
– Rent payment due date and grace period.
Take the time to go through the rental agreement with your tenants before they sign the lease. Make sure they fully understand everything in the rental agreement to avoid issues once it becomes time to start collecting rent.
These are just some of the proven ways on how to collect rent on time. However, if you’d rather not have to deal with this process, you can simply hire a property management company. These professionals will do all the dirty work for you, allowing you to focus on other important things instead.