Up to 15% of American households fall behind on rent.
Rent collection is an unpleasant topic for many landlords. But it doesn't have to be. Collecting rent is a delicate dance that demands you approach your tenant with care and understanding - without risking your bottom line.
Keep reading to learn how to approach it the right way.
Handling Rent Collection the Right Way
The wrong moves (read: rent collection strategies) will harm your cash flow. In the best cases, collecting rent won't be an issue - perfect tenants always pay on time. But those are hard to come by and sometimes you have to settle for less. Here's how to handle your not-so-perfect tenants so you get paid promptly.
Do: Get Everything in Writing
Documentation, documentation, documentation. It's the cornerstone of your rental agreements. You build a relationship with your tenants on a foundation of trust - and formal lease agreements pick up the slack when that trust gets broken.
Agreements should leave nothing up to chance and be as detailed as possible to avoid confusion.
Don't: Accept Verbal Agreements
Said with a charming smile, "I'll pay by Friday" sounds fair. However, relying on a verbal agreement is a risk.
Verbal agreements are difficult to enforce, so always insist on a written agreement as a matter of professional standard.
Do: Offer Convenient Ways To Pay
Online rent payment systems are increasingly popular, while direct deposits and written checks are traditional methods that many tenants still hold dear.
The more rent payment options you offer your tenants, the easier you make it for them to pay on time.
Don't: Accept Partial Payments Without a Formal Agreement
Partial payments are a slippery slope that sends you hurling down a path of financial unpredictability and additional bookkeeping to keep track of. It's up to you if you want to accept partial payment during a tenant's difficult times, but doing so without a formal (written) agreement sets a bad precedent.
Compromise with a formal agreement specifying the amount to pay, the due date, and late fees.
Do: Send Timely Payment Reminders
Timely reminders gently nudge your tenants without coming off as overbearing. They're courteous reminders that rent is due soon.
And if you end up dealing with a chronically late-paying tenant, you'll have a track record of attention to detail to fall back on.
Don't: Delay Action on Late Payments
Delayed action on your part sends the wrong message, implying late payments are tolerable. Taking action doesn't have to mean penalties and evictions: It's up to you to communicate openly with tenants.
Whether it's sending a formal notice of late payment or arranging a quick meeting to discuss matters, your prompt response demonstrates your professionalism.
Collect Rent With Competence
Rent collection demands you to blend a professional demeanor with a smidge of empathy.
Get everything in writing, protect your investments, and maintain the integrity of your relationships. Each time you collect, you're reinforcing your commitment to a fair agreement.
Adams Properties powered by PMI is locally owned and operated, serving the area around Mount Pleasant, SC. We help our clients maximize their profitability with a smile and we're committed to making property management manageable. Click here to arrange a consultation.
