Mastering the Art of Rent Collection: Strategies for On-Time Payments

Late payments can occur throughout a tenancy for various reasons. As a landlord, you want to make sure that this rarely happens. Protecting your income must be a priority so you need to learn better ways of encouraging residents to pay the rent on time.

If you successfully collect the rent, you can use it to invest in more properties to grow your portfolio. You can also use the proceeds to invest in property renovations to attract new renters or influence your current tenants to stay for the long term.

What are the Best Strategies For Timely Rent Collection?

Check out some of the effective tips below that you can use to ensure that you get rental payments within the scheduled date.

1. Choose Tenants Wisely

In the property management process, selecting qualified tenants is the most crucial part. To choose good and qualified renters, you need to create a solid tenant screening process.

You must make sure to verify the details provided by candidates. Review the tenant history by contacting previous and current landlords.

Credit score reports and eviction reports are also handy to get all the essential information. However, some states limit reports that landlords can access so read the landlord-tenant laws that apply in your area first.

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It is always helpful to know the income a potential tenant makes so you can assess if they can meet the rental obligation each month. However, this should be among the factors you can measure and not just a single reason for accepting a renter.

You can opt to hire a property manager to run an extensive tenant screening on your behalf since screening renters can be a time-consuming task.

2. Choose the Most Convenient Rental Payment Methods

In today’s world, collecting rent payments in a streamlined way is possible. With the variety of electronic fund transfer options using third-party apps, it is easy to set up and use Zelle, PayPal, Venmo, or other popular digital payment tools.

Another way is to engage the services of property management companies, which often have their online portal for rent payment, making it easy to collect the dues each month.

3. Communicate to the Renters the Different Methods of Paying the Rent

Whatever payment platform you utilize for rent collection, you should ensure that your renters know the process of paying the rent.

They should know the following:

  • rental due date
  • available platforms and methods of payment
  • step-by-step process of paying the rent using specific platforms
  • process of paying the rent for each available payment platform
  • person to talk to in case they encounter online rent payment issues

partnering-with-a-property-management-company

If you partner with a property management company, they will often have clear guidelines of paying the rent in the lease contract. They inform the renters during the lease signing and may also send out reminders through email or phone.

4. Charge a Late Fee Penalty

You want to enforce the lease firmly so it is best to charge a late fee to encourage prompt rental payment. If you ignore late payments and have no negative consequences for them, then the renters are likely to ignore the payment policies in your rental, too.

Specify that you will collect a late payment fee in your written lease. If there is a grace period, then make sure to mention it, too. Before finalizing the fees, research your local state laws to ensure you comply with how much fees are acceptable and if a grace period is allowed.

5. Implement Incentives to Motivate On-Time Rent Payments

Consider shaving off the rent dues by offering discounts for early rental payments. This strategy can push renters to pay on or before the due date. You can also reduce the fee for renters who always pay the rent consistently for several months.

6. Talk to the Renters if You Notice That the Rent Payments Are Late

If a renter has been paying the rent after the due date, it is best to intervene early and learn the challenges that a renter is experiencing. Has there been a financial emergency? You can offer alternative ways to pay the rent once you know the cause.

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If the due date simply escaped the notice of a renter then you can consider sending automated email reminders to help them. Should the issue be a different payday then you can match the rental due date with the salary date to resolve the problem.

It is always advisable to be open and offer different solutions. This will enhance your landlord-tenant relationship. Once they see your sincere effort in making it easy for them to pay, renters will strive to pay on the due date.

7. Enforce Your Rental Payment Terms

While it is true that you must practice empathy, you should also remember that you are running a business.

Your lease terms must be respected so you need to be firm when collecting late fees so you also won’t be taken advantage of and your tenants will abide by the conditions stated in the rental agreement.

Bottom Line

Collecting the rent on time can help you succeed in the rental business. You just need to develop a solid rent collection system that reduces the stress of all parties. Study the different payment methods to use, the late fees you can charge, and the incentives you can extend. Communicate openly with your renters and take time to understand the causes behind the late payments.

You can also partner with a trusted property manager, TE Johnson & Sons, to save you time and access efficient rent collection systems.

Contact us today!

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