A vital part of being a landlord is rent collection. Rent collection is more than just telling your tenants how much is due and when it is due. It is important that you have a good rent collection method in place for you and your tenants if you want to get paid on time. An ideal rent collection method is one that is convenient for you and the tenants. You want to make it easy for your tenants to pay rent each month so that they don’t have excuses for not paying their rent. It is also important to have a good rent collection method to keep track of which tenants are current with their rent and which ones are behind on their rent.
Having the correct rent collection method will make your life easier. Nevertheless, you can have a great rent collection method in place but if you get a bad tenant your method will be worthless. A successful rent collection starts with a thorough tenant screening process. We cannot stress enough on the importance of tenant screening. Take your time because a rigorous tenant screening will help you ensure you have high-quality tenants who in the long run will save you a lot of money. The best type of problem is one that never occurs.
Communication is a very important aspect of creating a good relationship with your tenant. Make sure you are entirely clear about when the rent is due. Inform your tenants about the consequences of not paying rent on time. This is not to intimidate them but to be honest with them.
- Charge a late fee
- Report the status of rent payments to a credit check bureau
- Terminate the lease
Your lease should include
- Rent amount
- Deposit amount
- What day rent is due
- What day rent is considered late
- Is there a Grace Period? (Don’t offer a grace period unless you are required to by law)
- What late fees will be issued if the full rent amount isn’t received
- Acceptable forms of payment
- How rent will be delivered or collected
- Consequences for not paying rent on time and in full
Rent is typically paid to the landlord by check, cash, credit/debit cards, and through certified funds. Paying rent by check is one of the most common ways that tenants pay rent. It is pretty easy, the renter just writes a check and sends it in the mail. The good things of checks are that they are widely accepted, there is a paper trail, you can deposit with mobile apps and there are federal laws protect against fraud. The inconvenience is that if they send it by mail you have to rely on the mail to deliver it. The mail might get lost, and you have to physically go to the bank to deposit the checks. Another inconvenience is that you have to spend a lot of time doing manual entry into your accounting software. You also have to deal with insufficient funds. We wouldn’t advise getting paid by cash. You don’t want to walk around with large sums of cash and risk getting robbed. Cash is difficult to track and nearly impossible to prove in court. Paying rent online is a safe way to get paid, especially through rental management software. They can also pay online with a credit or debit card.
You can choose to not have any of the rent collection problems by hiring a property management company. At Crown Key, not only do we collect rent payments for you, but we also deal with all the tenant’s complaints, handle maintenance issues, and fill vacancies.
Read our previous blog on collecting rent online