7 Effective Tips To Get Your Tenants To Pay Rent On Time
Real Estate can be a very profitable business. However, it requires some sort of professional management or property manager to be able to manage the cash flow well and enjoy the profit that follows. It can also be a real hassle, after all, you are dealing with humans — and us as humans can tend to be very difficult. As such, when it comes to paying rent, not all your tenants will want to pay on time. Some will like to intentionally default on their payments while others may forget or be unable to pay due to one factor or another. There are still others who prefer to receive a light reminder from time-to-time before they will pay their rents.
As a Landlord or property manager, you don’t want to appear too soft or too harsh. Being too soft will make your tenants continue to default on their rent payment while being too harsh will leave a negative impression on responsible tenants leading to them vacating your house. We must admit, tenants are not always the most responsible people, there are times when some issues come up that prevents your renters from fulfilling their payments.
To help you get your renters to make their payment on time, we have listed some tips to guide you when dealing with your renters.
1. Make Rent Payment Automatic
Using an auto-pay system to collect rent can save you the hassle of continually reminding your renters to make their payment. It completely eliminates some human errors such as “forgetting to pay rent.”
To use an auto-debit system on your renter’s account will require your tenant giving his consent and setting it up with your chosen method. There are lots of ways you can set up automatic rent payments. You can use “Automatic Clearing House” or “Online Bill Pay” system.
2. Screen Your Tenants
It is important you screen your tenants when accepting new tenants, it may seem like hard work in the beginning but will save you the headache of having chronic rent defaulters as tenants. Set stringent criteria for who you choose as a tenant. Some tenants will have an outstanding credit record while others will not, by screening your tenants before you allow them in your rental property you can be able to know those with good credit and those that have bad credit.
Set income requirements that every potential renter must meet. Another good way of knowing your tenants is by asking for references. Call up the previous landlord and ask, “if they would rent their house to them again.”
3. Keep you rent policy clear
One of the common reasons why tenants are often late in payments of their rents is because they are not made aware of its importance. Hence, it is very crucial your tenants know why it important they pay on time. Make sure your tenants understand your rent collection policy.
They should know
- How much they are paying
- When they are paying
- Any additional charges and the reason
- The payment methods
- Grace period
- The consequences of late payment
Make sure to follow the policy firmly and consistently; you may at some point cut some slack for some tenants going through hard times. However, you shouldn’t allow them to use your generosity as an excuse to delay payments, or else everyone will keep on coming back with the same explanation of going through hard times.
4. Avoid Collecting Cash For Rental Payments
It is never a good idea to collect cash from your tenants as a means of payments. There are dangers inherent in this method of payments. Paying with cash loses the paper trail in the event of the tenant taking off. Tenants who are involved in some sort of illegal activity most times choose to pay with cash; it is always a good idea to avoid tenants who prefer paying cash.
In your lease contract, add “no-cash payment” policy and enforce it. Be sure to provide an easy method of payment for your tenants.
5. Use Incentives To Attract Early Payments
If your rent payment is on time annually, you may choose to add an incentive to motivate renters to make their payment earlier. Instead of paying full 12 months rents, you can ask those who pay a month before the expiration of their current rent to pay just 11 and a half months rent. Adding an incentive will enable your tenants to try to meet up to enjoy your incentives. Make sure that your incentive is something that tenants must find valuable or else they won’t go for it.
6. Clearly State Consequences of Late Payment
No need for making a law if there is no punishment attached to it. Make the consequences of late payment clear in your lease contract. Every tenant must know that if they fail to pay their rent on time, you may report them to 3 major credit agencies, you can also make them aware that failure to pay on time will impact their credit negatively. Making your tenants aware of the consequences will keep them up, paying rent on time.
Your consequences may more or less be just a scare tactic, but in the case of chronic defaulters, you may choose to carry out the consequence as listed in the contract. You may need to call the credit bureau to get guidance before reporting tenants on late rent payments.
You might also, have a late fee attached to the contract and if they pay late, they must pay a “late fee.” This can be huge as we as humans don’t like paying extra for things.
7. Rewards Responsible Tenants
While you may choose to punish those who pay late, it can be a good idea to reward those who pay on time. It is a form of motivation and appreciation for paying their rents on time.
When you have a tenant who always pays when due, and also obeys all the rules of the property, you will likely to hold onto them. The best way of holding onto you renters is to show your appreciation by offering rewards. Believe it or not, they find massive value in such things as a simple, thank you card mailed to their home.
We at Authority Property Management dig renting out homes and apartments. If we can help you get your rental property in Redding CA. Rented out. We would love to speak with you. 530-410-6085
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