Collecting rent: the number one reason a homeowner hires a property manager. You can be great at maintenance, advertising, everything else, but if you can’t collect the rent on time, you will not have happy owners. At Secure Investments, we mitigate late payments and resolve rent issues speedily. Here are 3 tips we have to resolve late rent payments.
1. Rigorous screening process: The best way to prevent rent payments is to have a rigorous tenant screening process. Make sure they can verify their income so you know they have the ability to pay their monthly rent. We require our tenants to make 3 times the monthly rent. Additionally call their previous landlords to figure out whether they are the tenant any landlord would want or the chronic late payers. Calling the owner every month to explain why the rent is still not paid is never fun so make sure not to rush to rent to a tenant with poor rental history. It is better to put the work in the beginning finding a great tenant! Requiring large security deposits will also cover lost rent in the event an eviction does occur. We usually require $150 more than the monthly rental rate. Also check out this article to make sure your screening process is legal: How to Legally & Effectively Screen Tenants
2. Keep open communication: Late rent payments do happen. When they do, it is important to call the tenant right away and figure out the reasons behind the late payment. Get an exact date of when the full payment will arrive and be very clear on your late payments fees and what will happen if they don’t pay their rent. Communication is key during this process so no confusion will arise later. Also follow-up all phone calls with emails outlining everything you discussed with the tenant during the call. Written documentation is crucial during an eviction process.
3. Compromise is easier than eviction: Circumstances change and property managers need to adapt to that. If a tenant loses their job or cannot afford the property anymore, be willing to work with them to find a new tenant and the current tenants a new, more affordable place. Instead of threatening eviction, offer the tenant a compromise. It is less stress for a current tenant to move to a more affordable place while you advertise to find replacement tenants. Of course, the tenant still owes the overdue rent and will owe monthly rent until new tenants are found but the sooner you begin advertising, the sooner a new tenant can be found who will pay on time monthly and the current tenant can be released from the costly lease. Compromising saves time and money for owners by avoiding costly legal proceedings and shortening the turnover time. Additionally, you should have collected a large security deposit in the beginning so that will often cover turnover costs and the overdue rent.