Nearly 20% of American tenants are behind on their rent payments. Even when you have screened renters thoroughly, the most diligent can miss or forget about payments. So how do you improve the collection process?
If you are using an outdated system, then you are inviting problems. Read on as we discuss how to improve your rent collection process.
1. Set Up Reminders
Even the best tenants will have busy lives. They may forget to make rent payments on time or send them a few days late. It does not harm if you give a friendly reminder.
Automated messaging is a great way to do this. When you send personal messages, it can seem like you are overbearing. Yet if your tenants know an automated reminder comes every month, it looks professional and prompts them to pay on time.
2. Incentivize On-Time Payment
When you incentivize timely payments for your rental property, you are helping out tenants and yourself. It does not take long to set up a credit reporting system, whereby timely payments increase the credit score of your renters. You may also choose to offer a small discount if payments are on time over a given period.
3. Make Paying Easier
Some landlords still use the old method of collecting the rent by hand. This has numerous problems, mainly involving trying to find a time that suits you both. If you get a cheque, you then have to drop it in the bank and wait for it to clear.
Numerous alternatives are available that make paying easier and faster. Both Paypal and Venmo are ways that you can collect rent digitally through an application or web browser. Though these are basic services, all you will need to do is send a payment reminder which they click on and enter their details.
4. Using Consequences for Late Payment
Using consequences for late rental payments will ensure funds are paid on time. Yet if payments are a day or two late and you use this repeatedly, you may have a high turnover of tenants. If people are paying, it is better to have tenants who pay a little late every month than troublesome ones you might replace them with.
Include a late payment fee in the contract but make sure you are willing to waive it. The rules for how much you can charge may depend on where your property is and the type.
5. Use a Property Manager
Sometimes, the problem with rent payments being late could be you. If you have old systems in place, lots of property, and no time to collect then the tenant may just be waiting. A property manager can take responsibility for you, making sure payments are timely and doing all the necessary administration.
Making Rent Collection Changes
Now you know these methods of rent collection, you can begin to make changes. Luckily, they cost very little to put into place. Only late payment penalties and payment incentives may need adding to contracts which you can put in place with your next set of tenants.
Baltimore Property Management should be your first stop. We can manage all your properties so you can spend your time on other endeavors. Visit us here to speak to one of our representatives and let us manage your property portfolio.