As a landlord, your main goal is to ensure that tenants in all of your rental properties are prompt with their payments each month – and that rent is paid in full. However, it can sometimes be challenging to consistently achieve a 100% rate of payment.
Below are some tips that landlords can use to help ensure that they are successful when it comes to regular rent collections.
Improve Screening of Tenants
The most crucial aspect for ensuring that full rental payments are collected is thorough tenant screening. If you find the right tenants, you’ll generally never experience issues when the time comes to collect the rent at the end of the month.
Although it’s impossible to determine how a person will be as a tenant just by performing pre-screening, these tips can give you an idea:
- Always verify applicants’ income with employers and ensure that they are indeed earning the amount they claim to earn
- Contact a potential tenant’s current and previous landlords for references. Although a current landlord may embellish on details to get rid of an undesirable tenant, past landlords will usually provide 100% honest feedback
- Obtain a potential tenant’s credit report and score, as this will allow you to assess payment history
Set Clear Terms and Review your Lease
Your lease must clearly stipulate:
- Rent price
- When it’s due
- What classifies as a late payment
- What a tenant must do if rent will be late
- Factors that will result in eviction
- How an eviction will proceed if required
Review your lease thoroughly with your tenant before having them sign it to ensure that they understand everything that’s been stipulated in it. Now is the time to ask if they have any questions or concerns as well.
Implement Consequences for Late Payments
Landlords can legally penalize tenants for late rental payments, but it’s crucial to set clear rules, determine a reasonable penalty fee and stick to your word in this regard. Ensure that your penalty is implemented the very first time a tenant defaults; otherwise they will most likely not take you seriously in the future.
Alternatively, you can consider rewarding early payments by offering a small discount on the rent amount that’s due.
Hire a Property Manager
Collecting rent is among the last favorite jobs of most landlords. However, outsourcing this task to a property manager will help ensure that it is done on time – and a property manager can even take the stress off of landlords by screening tenants on their behalf as well.
Consider Accepting Online Payments
Collecting rent in person or in the mail is quite inconvenient, making it easy for tenants to come up with excuses for late payments. Allowing your tenants to pay their rent online will make the process far easier for both parties concerned.
If you’re a landlord who has been struggling to collect full rent payments on time in the past, the tips above will help ensure that your cash flow situation improves significantly in the near future.