Top 7 Tips for Collecting Your Rent On Time
Perhaps, getting tenants to pay their rent on time is one of the biggest problems faced by so many San Fernando Valley property managers and landlords. Your business can be very profitable only if you can get your tenants to pay their rent on time.
Fortunately, this is not impossible. Here at Los Angeles Property Management Group, we have a structure that allows us to collect rent on time. This is one reason why many Los Angeles property investors are happy working with us.
The truth is that renters are not the most fiscally responsible people. You may need to take some measures if you really want to get your rent on time every month. In this article, you will learn of some tips that will help you achieve this goal.
- Choose Your Tenant Carefully
Don’t be desperate to just choose anyone as your tenant. You need to be careful about the type of people you choose as tenants. To ensure you get the best tenants, you will need to set criteria and do a thorough tenant screening.
Your criteria may include having a good credit record as well as a policy that requires a tenant to earn a certain amount of income before applying to be your tenant. You need to enforce your criteria strictly. You also need a thorough tenant screening to weed out bad tenants who won’t be able to meet these criteria. With careful planning, you can get quality tenants that won’t have problems paying your rent on time.
- Make Rent Payment Automatic
One of the best ways to ensure you receive your rent on time is to make payment automatic. This can be done by setting up auto-pay or auto-deduct system that will automatically debit your rent from tenants account and pay the same to your bank account. This arrangement not only makes it easier for you to get your rent payment on time but also eliminates the factor of human error such as the tenants forgetting to pay their rent on time.
- Put In Place a Strict “No Cash” Policy
It is never a good idea to collect cash as a landlord or property manager. You can easily lose it. Moreover, it leaves no paper trail in the event that your tenant disappears. You can eliminate all the risks involved with collecting cash by enforcing a strict “No Cash” policy. Make it known to your tenants that they can only pay rent by check, money order or direct debit. This policy must be clearly stated in your lease or rental agreement.
- Enforce Your Rent Collection Policy
Having a rent policy is one thing, enforcing it is another thing. If you want to always collect your rent on time, make sure you can enforce your rent collection policy.
When writing your lease agreement, it should address all payment related issues such as:
- The exactly monthly rent
- Rent due date
- Acceptable payment methods
- Grace period after the due date
- The consequences of bounced checks
While it is necessary to be aggressive in enforcing rent collection policy, use your better judgment to know when a tenant is genuinely experiencing hardship and cut him some slacks. You can forgive late payment but make sure it happens only ONCE.
- Make the Consequences of Late Payment Known
Let your tenant understand the consequences of paying their rent late. Let your tenants know you will be forced to report them to a credit agency for late payments. Of course, this would ruin their credit record if you do.
It is important you state in your lease agreement that late rent payments may be reported to the 3 major credit agencies. Stating it is not enough, you have to show them you are ready to enforce it as well. Doing this will help your tenants to pay your rent on time.
