If you want a rewarding rental business, you must know how to identify and attract high-quality renters and make them pay promptly. Well-paying renters will ensure that you get your money steadily each time it is due. If you are a landlord struggling to collect the rent on time, here are a few tips you can use to overcome such a challenge.
7 Ways to Collect Rent on Time
1. Automate the process
Being a good landlord and business owner entails automating the processes that can be automated. An effective way to make your tenants pay is to set up automatic rent paying methods. For instance, you could utilize any of the auto-deduct or auto-pay solutions flooding the market, such as Automated Clearing Houses, Online Bill Pay systems, or post-dated checks. Through such solutions, you will not have to worry about a tenant forgetting to pay since the amount will automatically deduct when it is due.
2. Vet your tenants wisely
At times, the only reason you are struggling to collect payment from your tenants each time it is due is that you have the wrong tenants in the first place. For instance, if you have renters who lack a stable income, cannot afford the premises, have a poor record of meeting his or her financial obligations, then you are in for it. Avoid such a predicament by putting in place thorough tenant screening processes, which will help you to identify renters with good credit ratings, desirable incomes, and flawless rent-paying history.
3. Adopt a cashless policy
Even though you want the money, avoid taking cash from your tenants. Cash collections attract a myriad of challenges such as lack of proof of payment, or the money getting lost. Instead, establish a practice where you give your tenants convenient rent paying alternatives. Excellent choices could be checks, money orders, and direct debit payments.
4. Have a strict collection strategy
If you want your tenants to make prompt payments, then you must put in place a stern, consistent, and practical guideline on how to do that. You can include a clause in the rental agreement, which clarifies what your expectations are concerning payments. Some of the basics you should clarify are the precise monthly rent, the due date, the acceptable payment methods, as well as how and where to make the payments.
5. Find out why a tenant always defaults
In case a previously well-paying tenant starts to default in payment, take the time to find out what could be wrong. There are numerous grounds for such behavior. For instance, it could be because the tenant is not aware of the due date, payment procedures, or where to pay. On the other hand, the payment process might be inconvenient and a challenge to use. Still, it could be that the renter receives his money way after the rent’s due date. It is also possible that the person is in a temporary financial crisis that prevents him or her from paying on time. At times, however, he or she could be deliberately holding on to the payment in protest of their unattended concerns.
6. Clarify the consequences of default
At times, an effective way to motivate your residents to pay promptly is to make them aware of the repercussions of late, bounced, or default payments. You can do that by including a statement in the lease contract informing the tenants that you will not hesitate to take such measures. For instance to charge them a late payment fee, report them to major credit agencies, or evict them from your premises.
7. Give incentives to encourage renters
As the owner, the last thing you want is to lose good tenants. Therefore, if you have a responsible occupant who consistently pays on time, takes good care of your property, and upholds the lease agreement terms, it is best to reward him or her for it. Such an act demonstrates to the individual and other tenants that you appreciate their efforts. Moreover, it helps to reinforce such positive behavior.
The above tips will help you to collect your money on time. However, it is critical for you to remain personable, approachable, and professional if you want to have a worthwhile rent collection exercise.