It’s hard to earn money on your rental property investment if you aren’t collecting rent. Many landlords tend to be too permissive when it comes to rent collection policies. You need to have a system in place, and then you need to enforce it. Today, we’re sharing some ideas on how to get your rent paid on time.
Put Rent Policies in Your Lease
Your lease should include specific information about how and when to pay rent. Make sure your lease agreement indicates how much rent is due every month and what day it is required to be paid. Most leases have rent being due on the first of the month. You must also include whether you’ll allow a grace period. The lease should reflect the consequences of not paying rent on time, up to and including eviction from the property. If there’s ever a dispute or a question that you and your tenant are struggling to work out, the lease is the first place you should look. Make sure your lease covers rent payments in their entirely.
Enforce Late Fees and Other Penalties
Will there be a late charge assessed when rent is paid late? If so, at what point? Some leases will say that the late fee is a specific amount. Other leases require tenants to pay a fee every day that late is rent. Make sure your late fee is reasonable. California law does not define what that means, but the courts will not enforce the payment of a late fee if it’s prohibitively large.
You have to enforce these late fees. If you waive the late fee or you’re inconsistent about charging them, you’re going to give your tenants the impression that you don’t really care when rent is paid. Charge the late fee every time, and make sure you do this with all your tenants. If you charge one tenant a late fee but a different tenant gets a pass, you could find yourself in a fair housing lawsuit.
Provide Several Ways to Pay
When you want to ensure your rent will be paid on time, you have to give your tenants options. Electronic rent payments are the most popular, especially among property management companies. We have specific software that allows us to collect rent online from tenants. Individual landlords often don’t have such tools, but you can still accept wire transfers or payments via PayPal, Apple Pay, Zelle, or other electronic payment platforms. This makes it easy for tenants to pay, and you’re less likely to get a late check. You can also accept checks, money orders, even credit card payments if that’s what works for your tenants.
When you provide options, you hear fewer excuses. Some tenants will want to hand you a check in person and others just want to move the money from their account to yours without any hassle. Be willing to meet the needs of your residents. It will help you get paid on time.