As a landlord, you are probably in search of the best way to collect rent from your tenants. Of course, you do not want to be left “up in the air” and so, it is important that you come up with policies and strategies that will help you get the rent in a timely manner.
5 Tips for Collecting Rent Promptly
Tip #1: Make It Automatic
One of the best ways to ensure that your tenant will be able to pay his rent on time would be through the help of an auto-deduct or auto-pay system. There are different types of systems that you can use for your convenience, such as one that would automatically deposit the money into your account. The main benefit of this is that you do not have to worry about common human errors, such as your tenants forgetting to pay their rent on a specified date.
Tip #2: No Cash Policy
In the good old days, landlords would collect cash from their tenants. However, things have changed and this isn't a good idea anymore. For instance, cash is too easily lost, leaves no paper trail, and if your tenant is involved in illegal business activities you would not know.
These risks can easily be eliminated by establishing a policy wherein you would not accept cash as a form of payment. For this, it's important that you come up with a legally sufficient notice of your “no cash” policy, such as accepting cash, direct debit, or money cash order instead. This should be included in the lease or rental agreement.
Tip #3: Choose Your Tenants Wisely
If you want to ensure that you will be getting the rent payments on time, then you have to screen your tenants with great care. Only rent to those with great rental history and fit your criteria. There should be an income requirement, which must be at least three times the rent amount or more to make sure that they could easily pay the rent. Likewise, a good credit can also be an assurance that you won't face such issues.
Tip #4: Utilize an Online Rent Payment Service
You can also consider the use of a third party provider to handle rent collection. There are varieties of rent payments to choose from, with different fees. These services are usually more affordable than what's being offered by the bank.
Tip #5: Reward Responsible Tenants
An integral part of managing a rental property is making sure that you have good tenants. You should not only focus on preventing undesirable situations, but you should also think of ways you can show appreciation to tenants that have been paying on time. You can consider giving them a gift card, or a gift basket to keep their motivation.
When it comes to collecting rent, there are definitely many methods to choose from aside from the traditional way where landlords knock down doors. However, as a property owner, you should also keep in mind that not every option would work for you. That means you also have to develop a strategy and do not be afraid to test new ideas on how to collect rent.