You Can Collect: Best Collection Practices for Landlords
It is often said that if you don’t expect anything from anyone, you will never be disappointed. That is a clever, if not dogmatic, approach to life. And it is one that landlords can never abide by. The very essence of being a landlord hinges on the expectations that your tenants will pay you on time. When those expectations are not met, not only can it lead to disappointment, but it can also lead to financial difficulties. In a perfect world, rent would always come on time. Alas, this world is far from perfect. However, here are ways to ensure that rent is collected on time.
The most efficient way would be auto-draft rent payments. By using an automated clearing house, rent can automatically be deducted from your tenant’s bank account and deposited into a payment account. While it is the most efficient way, it does have its drawbacks. Each transaction incurs a small fee that the receiver is generally responsible for paying. Additionally, transactions can take a few days to process, which doesn’t make it the quickest payment solution. Auto-draft payments also require that the tenants sign a document that allows the landlord to withdraw the rent from their account. This doesn’t always sit well with the tenant, however, so discuss it beforehand.
If the tenant is uncomfortable with automatic payments, the next best option is making payment easier. One of the easiest ways for people to pay for anything these days is through the internet. Most banks feature online bill payment options that allow the bank to issue a check and mail it to the intended recipient. There’s also numerous software programs that have the ability to accept online payments from tenants.
Another way to ensure rent on time is the preventative step of choosing tenants who are financially stable. Make sure the tenant has a stable job with sufficient income, good credit and good references from former landlords. There are many tenant screening programs available to make prospects’ information easily accessible.
Being regular and consistent will also let your tenants know the proper procedure for paying rent on time. Be clear about how much is due, when and where you expect to receive the payments and the grace period for late payments (if any). These rules must be clear and set in stone with little-to-no wiggle room. If you give an inch, they will take a mile.
Penalties for Non-Payment
Finally, make the consequences of non-payment clear. Be prepared to report tenants to the credit agency and even be prepared to take legal action if necessary. Lawyers, like Utah’s Kirk A. Cullimore, have years of experience in dealing with landlord law and difficult tenants. Making clear to your tenants that legal professionals will bring repercussions will encourage on-time payments.
Managing property can be a rewarding industry. To maximize profits and keep yourself solvent, make sure that your tenants pay on time.