As a landlord, collecting the rent on time provides you with a steady income that you can use for property renovations, expanding your investment portfolio, or saving for personal expenses.
Learning how to encourage prompt rent payments by implementing a convenient online rent collection system or charging additional penalties can help improve rent collection.
However, aside from these tried-and-tested strategies, landlords can use other effective ways for timely rent collection. In this article, we’ll cover several key tips to encourage renters to pay their rent on time.
Strategies for Timely Rent Collection
1. Select Tenants With Care
To avoid late-paying renters, you must follow a thorough tenant screening process. Develop excellent criteria so you only accept renters who can afford the rent and have a good tenant history of paying on time.
Make sure that you do a proper verification of their employment, credit score, and income. Ask for solid documents that showcase their pay and prove their employment so you can assess whether they can meet the monthly rental dues.
Additionally, you can call previous landlords to confirm their character and payment history.
If you hire a property management company, such as Nelson Property Management, they can apply an extensive tenant screening procedure to ensure you accommodate high-quality residents who make timely payments.
2. Apply a Convenient Rent Payment Method
With the rise of technology in recent years, there are multiple convenient ways to collect rent digitally. You can ask your tenants to pay the rent using Zelle, PayPal, Venmo, or other popular rent collection software designed to provide more benefits for both parties to the lease.
If landlords only rely on cash and check payments, there is a chance that the rent will be paid late. Depositing at the bank can take a while, especially during bank holidays, bad weather, or illness.
Online payments are especially important if you are a long-distance landlord.
3. Let the Tenant Know How to Pay Their Rent
Your tenants must be guided properly on the options for rent payment, so if they have a problem coursing the rent payment using a particular online platform, they can try another way to ensure they pay on the due date.
Make sure renters are informed on:
- When their rent due date is
- What platforms are available for rent payment
- Process of paying the rent for each available payment platform
- Who the point person is when payment issues occur
Property management comapnies will often arrange a lease agreement which includes written instruction on the rent payment processes.
On top of that, some have automated systems to send email instructions regarding rent payments. They are also your designated professional tenant support in case any rent issues arise.
4. Charge Renters a Late Fee
If you implement a negative consequence such as charging an additional late fee penalty for overdue rent, it can motivate renters to make timely payments.
However, make sure to place this in writing so renters know how much the late fees are going to be and if a grace period exists.
Check out the local and state laws since some states, including Michigan, stipulate rules on fees you can charge and the timeframe of a grace period.
5. Think What Incentives to Use So Renters Pay on Time
You can inspire your renters to make timely payments by offering discounts and other incentives. You can reduce the rental fee by a few dollars when the renter pays on or before the rental due date. For example, you can also offer 5% off if they consistently pay the rent for several months.
Rewards often work better than penalties since people are willing to gain benefits rather than lose money on late fees.
6. Arrange a Discussion With Renters When Payments Are Late
As soon as you notice that tenants are paying the rent late, communicate with them. It’s best to find out the cause behind it. They might have simply forgotten or had insufficient funds when the due date arrived.
You can start sending reminder emails to notify the renter of their rent so they won’t forget next time. You can also arrange a different due date so renters have money coming in before they need to pay the rent. Knowing the reasons behind the late payments helps you provide a better solution.
When the renter sees your sincere effort to accommodate their needs, they will also want to do their part to pay their rental dues on time.
When you hire a property manager, they can communicate with the renters who failed to pay the rent on time. This reduces your tasks if you want to minimize time spent on rent collection and following up with late-paying tenants.
7. Enforce Your Rental Payment Terms
Although landlords should remain flexible and accommodate the needs of their renters, it’s also crucial to adhere to the outlined terms and conditions presented in the lease agreement.
You should collect a penalty fee after the grace period passes if this is written on the contract. Otherwise, renters may no longer respect the property policies surrounding rental payments.
Rent collection doesn’t need to be a stressful duty for landlords. You can start by applying an extensive tenant screening, offering various payment methods, charging late fees, and offering incentives.
Establishing open communication with your tenants is also crucial for maintaining consistent rental income and a harmonious landlord-tenant relationship.
Partnering with a reliable property management company like Nelson Property Management can help you save time, energy, and money when it comes to rent collection. Contact us today to learn more!