Last updated on March 27, 2022
One of the main ways landlords make money is through monthly rent payments. One of the main hassles facing landlords is rent collection. Isn’t it ironic?
Perfect tenants are hard to find. Often, landlords have to deal with those who pay their rent late, if at all. If you don’t have a dialed-in system for collecting rent, it becomes even more chaotic and unpredictable.
Whether you’re a new landlord or a seasoned one looking for tips for collecting rent, we wrote this article with you in mind. Keep reading for some of our top strategies.
1. Establish Transparent Rules for Paying Rent
You can’t enforce rules with your tenants if they don’t exist.
Make sure you have clear, easy-to-follow guidelines in place with your tenants. They should know exactly when to pay, how much they owe, where to pay, and what the consequences are if they don’t pay on time.
These rules limit confusion while giving both you and your tenants grounds if there’s ever an issue.
2. Offer Different Payment Method
Some payment methods might be more convenient for some tenants than others. Offering more than one option makes it easy for all your tenants to pay on time, regardless of their preferences.
Paying rent online is one of the most straightforward options. You can offer this through your rental property’s website or through that of a property management company. Other ways to pay online include apps like Zelle or Venmo, and electronic transfers.
If you offer the option to write a check, establish when that check needs to be in the mail, or where they can drop it off in person (and when).
Having at least one online and one offline option should be enough, but having more might add to the confusion. So, choose two methods that work best for you. That being said . . .
3. Don’t Take Cash Payment
Cash payments are convenient—if and when they’re paid, and if they’re not disputed.
The main problem with taking cash is the lack of a paper trail. If a tenant drops an envelope of cash in your leasing office while you’re not around, it’s easy for them to dispute if later you find the payment to be short.
On the other hand, if you accept money orders, checks, and online payments, there’s always something tangible to reference.
4. Give Tenants Rent Reminders
Anything you can do to make rent collection easy and obvious is a huge help.
One method is to give your tenants monthly reminders.
You can do this by whatever means is easiest to you—automatic monthly emails, signs around the leasing office, flyers in their mailbox. If you’ve done everything you can to help your tenants pay on time, and they still manage to be late, you’ll know the issue isn’t you—it’s them.
5. Provide Incentives for On-Time Rent Payments
For many tenants, rent is their largest expense every month.
Unfortunately, paying rent on time doesn’t come with a side of accolades (besides avoiding late fees). While it’s a rewarding thing to do, it’s often thankless.
That’s where you come in. Landlords can offer benefits to those paying tenants. One significant bonus to tenants is reporting their on-time payments to credit bureaus, helping to bridge an all-too-common discrimination gap that many renters face later in life.
Another incentive includes rental discounts for paying early or on time for a consecutive number of months.
6. Utilize Property Management Services
As we mentioned earlier, one of the best methods for collecting rent is through a property management service.
You might be using one already for things like in-house maintenance, sales assistance, accounting services, or tenant screening and leasing. But are you using one (if at all) to assist you in rent collection?
Companies like reedyandcompany.com benefit both you, as a landlord, and your tenants, making rent easy to pay. Tenants create an account through their website, use ‘Pay Rent’ buttons to successfully pay their rent on time, and everything gets documented for you and them. Additionally, tenants can pay their rent from anywhere at any time—making it a breeze whether they’re out of town, too busy to stop by, or remember at the last minute.
7. Choose Tenants With Good Histories
One of the most important steps in choosing your tenants is checking out their rental history. When it comes to this stage of the vetting process, knowledge is power.
Don’t just take your tenant’s word for it. Rather, check with at least two of their previous landlords to see if they paid their rent on time and in full.
Observing their rental history is incredibly beneficial to you for other reasons, not just because you can see their history of paying rent. It can also illuminate facts like why they moved, if they gave proper notice, and how they treated the rental. If they treated previous rentals well, the chances are they will for you, too—and the same goes for treating it poorly.
Rent Collection a Headache? Use These Strategies for Collecting Rent. Landlords have a lot on their plates—property maintenance, repairs, finding and vetting tenants, and more.
If you can optimize your rent collection strategies, you’ll have one less thing to worry about. Using the tips listed above can help ensure a happy, long, and lucrative relationship between tenant and landlord.
From real estate and home improvement to marketing and finance, our site covers all the bases when it comes to being a successful landlord. Keep scrolling our page to see how else you can become an even more accomplished investor!
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