One of the most critical components of running a successful rental business is collecting rent payments. Your rent is what your rental business relies on – without it, you won’t be able to pay your bills. That’s why it’s important to implement a solid rent collection plan. In this blog, our property management experts have broken down methods and tips for collecting rent on time for your rental property.
In a perfect world, tenants would pay their rent on time month after month. Unfortunately, this isn’t always the case, as tenants often fail to pay their rent on the due date for valid or invalid reasons. Rent collection can be a headache because, chances are, you’ll need to chase after your tenants.
If you have tenants who never pay their rent on time every month, there are several steps you can take to promote on-time payments. Below, we’ve broken down a few ways to make sure your tenants pay up on time, every time. But first, we’ll talk about the ways you can collect rent.
Methods For Collecting Rental Property Rent
By establishing a process for collecting rent from tenants, you can keep track of who is staying on top of their payments and who isn’t. Do note that as a landlord, you need to choose which option is appropriate for your particular situation. For example, if you live on your rental property, it would make the most sense to collect rent in person – after all, you live next to your tenants. But if you’re a long-distance landlord, it would benefit you to work with a professional property management firm.
We’ve put together a few ways in which you can collect rent each month:
#1 Online Rent Collection
Accepting rental payments online is one option. Do note that if you decide to collect rental payments primarily online, you need to provide an alternative way of payment for individuals who are not that tech-savvy, such as senior tenants. There are plenty of online rent collection tools/apps, but one popular option is PayPal. The downside is that payments can take a couple of days to process, so if you need funds ASAP, it can be a headache.
#2 Collect Rent By Mail
If you live far away from your real estate investment, having renters pay their monthly rent via the mail might be a good idea. You can provide your tenants with self-addressed envelopes so it’s more convenient for them. The downside of the postal form of payment is that tenants can lie that they sent the payment when they actually didn’t. This can be avoided by asking tenants to get a “certificate of mailing” from the post office for a little more than a dollar. This certificate serves as “evidence” that the mail was truly delivered on the day and time specified by the tenant.
#3 Drop-Off Locations
When managing a multi-family rental property such as an apartment, a drop-off location for tenants can be a convenient way to collect rent. Tenants can simply drop off their rent so that you don’t have to wait days to receive it. It can, however, be a bit time-consuming because you have to constantly check the drop-off location to take note of who has paid and when they’ve paid.
The problem is that your drop-off site can become a target for theft. If you decide to collect rent via drop-off, it’s advisable to have your tenants drop their payments off at your your office.
#4 Face-to-Face Rent Collection
You can collect rent in person, but it can be time-consuming, so it’s best to do this only if you have a couple of tenants. Its advantage is that you’ll get the money immediately, but its disadvantage is that it can be a headache to “chase after” tenants.
Tips for Collecting Rent On-Time for Your Rental Property
Here’re the tips for collecting rent on time each month:
1. Be Clear About the Consequences
Your renters will be less likely to pay their rent late if they know they’ll be fined. At the start of the tenancy, you should be clear about your rent-related policies. Be clear about the due dates, fines, penalties for late rent payments, and more. These terms should be written in the lease agreement, which should be signed by your tenant – their signature shows that they understand the rules and regulations.
2. Talk to Your Tenants
Do you have renters who are always late on their rent? It can be tempting to evict them, but try to be more understanding and talk to them about why they’re always late. If their reason is valid, you can set up an alternative repayment plan for them.
3. Remind Your Tenants
Not all tenants will remember that it’s time to pay their rent – that’s why you need to be the one to remind your tenants. You can send reminders yourself or use property management software to send automatic reminders each month. Be sure to include in your reminder that tenants who pay their rent late will be fined.
4. Accept Online Payments
Online payments are convenient, which is why you should always provide that option. Many of today’s tenants want to pay their bills online, so it would be best to let them pay their rent online, too. Some property management tools even allow tenants to set up automated payments so they don’t have to manually send their money to you every month.
5. Screen Your Tenants
Want to collect rent on time all the time? Start with tenant screening. A strict tenant screening process will allow you to choose tenants who will likely pay their rent on time. You’ll be able to conduct a background check and look into their past payments with their previous landlord. If they have a history of late payments, you may not want to rent to them.
Partner With a Property Management Company For Efficient Rent Collection
Choose to partner with a professional property management firm to collect rent on time, each time. Property management experts such as Luxury Property Care not only collect rent for you – they can also handle tenant complaints related to late rent fees, penalties, and more. For more information on our property management services in South Florida, contact (561) 944 – 2992 or fill out our contact form.