A common challenge among landlords is how to get the tenants to pay their rent on time. It can be annoying considering that rental income is the primary reason why you invested in the rental property in the first place. Besides, difficulty in collecting the payments might hinder you from meeting other obligations like paying off the mortgage, carrying out property maintenance, reinvesting, or settling bills. So, how can you ensure that your residents pay promptly and in a consistent, smooth manner? Here are pointers to help you out.
7 Ways to Collect Rent On-Time
Establish clear rent rules
As the proprietor, you have the power to determine how you want the occupants in your property to pay the rent. You should come up with well thought-out rent guidelines that covers issues like the acceptable forms of payment, due date, grace period, consequences for default, as well as how and where to pay. When drafting such rules, it is necessary to ensure that they are practical, in your best interest, and do not contravene any existing housing laws or legislations.
Screen your renters
A rather obvious yet effective solution for collecting rent in time is to have good tenants in the first place. As long as your tenants are high quality and well paying, you will seldom experience challenges getting them to pay. However, if you have problematic residents, undoubtedly you will always struggle to get your money. It is prudent to screen any person interested in occupying your rental property to ascertain whether he or she can afford the price, and has an impeccable record of meeting financial obligations. It is equally essential only to admit individuals who have good credit ratings and landlord referrals.
Communicate to your renters the rent rules
At times, the only reason an owner might struggle to collect rental income on time is that the tenants are unaware of the lease rules. For instance, they may not know the due date, where to pay, who to pay, or even how to pay. Avoid such a situation by making it clear to your clients what the rules are. An excellent way of doing that is by embedding them in the rental agreement which each tenant must sign as an indication that he or she agrees and accepts. With such a measure in place, your clients will have no excuse for not paying promptly
Have a reliable and convenient rent collection system
If you want to receive your payments smoothly, you need to give your tenants a convenient and practical way of paying.
Whatever method you settle for, must be suitable for both you and your clients. Otherwise, your customers might feel inconvenienced and refrain from using the systems. Fortunately, there is a wide selection of rent payment solutions that you can adopt. These include online payment portals, post-dated checks, debit payment systems, Automated Clearing Houses, and money orders. A notable advantage of the automated systems is that payments spontaneously deduct from the tenant’s account each time it is due, which significantly reduces the possibility of defaults.
Discourage cash and partial rent collections
Experienced landlords will attest to the fact that renters adapt to how you manage them. For instance, if you allow them to make cash or partial payments, it will eventually become a habit. Partial payments not only waste time, but they are troubling in that you have to document each payment separately. Furthermore, the partial payments interfere with your ability to meet financial obligations. Cash, on the other hand, can easily get lost or misused. Besides, such methods are difficult to prove as documentation hardly accompanies them.
Give incentives to well-paying renters
An efficient way to reinforce prompt payment on your rental property is to reward the tenants who pay before the due date. The choice of incentive will depend on you, and they could include things like cash, shopping vouchers, paid utility bills, discount on rent, movie tickets, or a paid dinner. Be careful however not to be a spendthrift, as you are still in business. The mere prospect of winning such awards will motivate your tenant to make timely payments.
Even though you want to be a great landlord, you should draw a clear distinction between friendship and business. If a tenant defaults in any way, whether it is late, bounced, or deferred payments do not hesitate to carry out the appropriate punishment. Such action could be demanding the rent, charging fines, reporting to the leading credit reference Bureaus, or evicting the tenant. As long as the residents are aware that you are serious, they will do their best to pay promptly.
These suggestions are just a few ways of ensuring timely rent collection from your rental property. You only need to be objective and stern when implementing them. Still, if you lack the will or time to do these, you can hire a professional property management company to help you out.