When you purchase a house or other property to rent out, you're often reliant on the tenants to make sure that the bills get paid on time. Their rent may take care of the mortgage, provide money for repairs to the property, and help increase your available savings so that you have the money for other projects in your arsenal. Unfortunately, if your tenants don't pay their rent on time, that means you won't have the funds you need! Learning how to make sure tenants pay their rent on time is an important part of being a landlord.
Be Clear About Expectations
What day of the month is "rent day" for your tenants? Is it different based on their move-in date, or do you have a standard date when all the rent is due? You should also include information about how tenants are expected to pay their rent. If dropping it off at a physical location is allowed, what should they do if no one is there? Does the money come to you, or does it go through a third party? By communicating your expectations--and the penalties for missing those expectations--clearly, you create a better environment for tenants who are eager to pay their rent on time.
Some people simply miss the mark when it comes to paying their rent on time. They're the ones who are always scraping in on the last day of the month, or consistently two or three days late, or who frequently "make up" a month at a time. If you want to weed out the number of tenants who are consistently late with their rent payments, institute penalties! A fee added on to the rent for each day or week that they're late or even a blanket acknowledgement that being late with the rent will cost an additional $50 is a great way to encourage tenants to make paying their rent a priority.
Talk to Your Tenants
Some tenants genuinely want to pay their rent on time, but there's something standing in their way. Sometimes, it's simple forgetfulness: they don't remember when the rent is actually due each month, or perhaps they don't even realize that they forgot a payment back in January and have been a month behind ever since. In other cases, extenuating circumstances may have led to lateness: sudden job loss, unexpected medical expenses, or an unexpected bill can make it very difficult for tenants to come up with the rent on time. By talking to your tenants, you can reach an agreement for repayment, offer leniency when circumstances are out of their control, and ensure that they remember exactly when the rent is due.
If you own multiple properties, especially if you own a multi-family dwelling or several properties in the same area, your tenants are going to talk. Make sure that you are consistent with your expectations. Don't let tenants get away with nonpayment. Let them know that you'll quickly report them to a credit bureau for nonpayment if necessary. When you're consistent, your tenants will know that you're more likely to act if they don't pay.
Collecting rent on time doesn't have to be a massive headache. When you follow these strategies, you'll find that you're in a better position to collect rent on your properties. Want to learn more about real estate investment or to get started on your journey? Contact us today to learn how we can help.