The one thing all landlords can agree on is that the day rent is due, is the best or worst day to be a landlord! In many cases rent collected by landlords cover fees and costs that the landlord needs to pay for whether they collect rent or not. Many investment properties have costs such as a mortgage, HOA fees, maintenance fees as well as taxes due. For most landlords, their rental property is an investment, and rent is the return on that investment. So, what happens when rent is late? Learn the dos and don’ts of collecting a late rent payment.
What Not to Do When Rent Is Late
Though it may seem like the tenant is 100% to blame when rent is late, there is a right and wrong way to handle a late payment. These are the absolute DO NOTS when it comes to late rental payment.
Do NOT Accept an Oral Agreement
You are in for trouble the moment you take your tenants word for it. Whether you let them tell you that “rent is coming,” or even worse, have accepted an oral agreement instead of a lease. It is very difficult, if not impossible, to enforce an oral agreement. Any discussions revolving around rent or late rent need to be put in writing.
Do NOT Try and Be the “Nice Guy or Girl”
Even if you own several rental properties or several rental units and don’t necessarily need that rent check to make ends meet, don’t try and be the nice guy. When your tenant signed their lease, they entered into a contract, and enforcing that contract isn’t a matter of being nice or mean, it’s business.
DO NOT Waive Late Payments
Many tenants will assume that they will satisfy their requirements by simply paying the overdue rent. Enforcing late payment fees is a financial motivator that may help decrease the likelihood of future late payments.
What to DO When Rent is Late
There is a right way to handle when rent is late. By handling late rent payments property, you can learn how to ensure best that you protect your financial interests.
DO Begin Eviction Proceedings ASAP
Beginning eviction proceedings doesn’t mean that you are immediately giving your tenants the boot. Beginning eviction proceedings simply means that they begin receiving formal notices. This protects you if rent continues to go unpaid and you do have to evict as well as conveys the severity of the situation.
DO Consider Automation
Missing a rent payment can be a sensitive subject, it is difficult for most people to talk about money. Automatic reminders can be a helpful first point of contact between landlord and tenant for rent collection. It can make the process easier for everyone.
Collecting Rent: Best Practices
To ensure collecting rent goes each month smoothly the trick is to be consistent. If you collect rent the “old fashioned way” and pick up checks, be sure to pick them up on the same day each month. By prioritizing consistency, your tenants will feel held accountable.
Also, you will want to ensure from the beginning that your leases have the right language and parameters set regarding late payments. It can be difficult to successfully evict a tenant for non-payment or charge late fees if your leases aren’t set up correctly, to begin with.
The Benefits of Professional Property Management
If all these dos and don’ts are making your head spin, you may want to consider professional property management. A professional property manager will not only ensure that you are set up correctly from the beginning, but they will also assist you if you get in a difficult place with a tenant. Whether you want to create a seamless rent collection process, or are struggling to collect rent from a problem tenant now, call 281-866-7400 and let Precision Realty & Management handle the rest.