Mastering the Art of Rent Collection: Strategies for On-Time Payments
As a rental property owner, effective and timely rent collection is one of the most important factors in property management. More often than not, rental property owners suffer from defaulters and late rental payments. This should not discourage you.
From our experience in the property management field, we can attest that on-time rental payments are a possibility. With the right strategies and proper implementation, you can enjoy your rent on time and in full every month.
The team from Dawson Property Management shares its experience, guiding landlords on the ideal rent collection strategies.
Tenant Screening and Selection
The chief defense strategy is choosing quality tenants who will comply with the terms of the lease agreement. Who do you want to lease your premises? A high-quality tenant.
This is a tenant who pays their rent on time and in full. And how or where do you find such a tenant? By implementing a comprehensive tenant screening process.
The screening process is meant to protect your interests as the landlord. It is meant to verify the character, rental history, financial capability, and employment of the tenant. Once you decide on a tenant, you can be assured to a high degree of their character and financial capability.
Convenient Rental Payment Methods
Are you still taking cash and checks as your preferred method of payment? This could be a reason why your tenants are late in paying their rent.
Requiring your tenants to pay via checks could be a significant inconvenience to them.In today’s digital world, there are a myriad of ways to make payments.
Digital payment solutions such as PayPal, Zelle, or Venmo are easily available and convenient for both the payee and the recipient. Payments can be tracked easily and they reflect almost immediately on either end.
Communication With Your Tenants
Do your tenants know the finer details of the rental payment schedule? For your tenants to pay you the rent timely, you should include the following details and instructions regarding the rental payments:
- The due date for rent
- Preferred payment methods (refer to previous section)
- How to pay rent (especially if you are using a digital platform)
- How they can reach you when they experience an issue)
Penalties
We acknowledge that sometimes the problem might not be with the landlord. You might have followed our instructions and even went the extra mile to give your tenants some leeway but you still get your rent late. The next strategy that you should implement is to enforce a late penalty fee.
Consider it a motivation tactic. And like any tactic or strategy, it is only as powerful as how it is employed.
First and foremost, the penalty fee must be included in the lease agreement. This covers you legally and sets the bar. The terms of the penalty (% charged in late fees) should be unambiguous to the renter.
Reminder: Please read the State’s Landlord and Tenants Rules. Some states, from our experience, dictate the percentage or amount of late rent fees that you can charge a tenant. Otherwise, you could find yourself in a court of law.
Incentives
You don’t always have to turn to the dark side to enjoy steady and on-time rental collection from your property. Incentives can also work wonders on your tenants. Showing your clients that you appreciate them can be the solution that you never envisioned.
Some of the incentives that have worked on our properties are:
- Discounts. You could offer a percentage discount or a flat-rate discount to those tenants who pay before the due date. And who doesn’t like a discount?
- Gifts and giveaways. You can partner with a local service provider or store in your area. A tenant can receive a gift card or voucher to spend at a local shop.
Be Humane
While you might have carried out a comprehensive tenant screening solution and selected the best tenant, a tenant might be going through tough financial times.
It could be that a relative is sick or they have just been laid off from work. Punitive measures and other solutions in this article might not be the ideal route to take.
After several late payments, it might be ideal for you to approach the tenant and ask for a sit-down. You can ask if they are experiencing any financial issues and how better you can address the matter moving forward.
Communication from both ends allows you both to move at the same pace and manage expectations.
A Lease Agreement
While we mentioned it in passing above, this needs a section by itself. As a rental property owner, you need a legally binding lease agreement that dictates the leasing terms in your rental units. A gentleman’s handshake won’t do it.
It is only on your lease agreement that you can introduce late fees and penalty clauses. And most importantly, be sure to comply with county ordinances, State, and federal rules and regulations.
Conclusion
Are you a landlord in the Charlotte NC area? Are you facing a myriad of challenges managing your real estate portfolio? You need a property manager by your side who understands the market and who can offer comprehensive solutions all year round.
Look no further than Dawson Property Management. We are the leading service provider in the area with decades of combined experience. Our local and loyal clients can attest to the quality of service that we offer and the professionalism of our employees.
Get in touch with Dawson Property Management today and receive an affordable quote for our services.
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