Don’t Chase Your Rental Payment Down the Rabbit Hole!
Use These Tips to Handle Late Rental P
“I’m late! I’m late! For a very important date.
Yes – late indeed!
That rental payment was due on the 1st and here we are on the 10th with nothing but crickets to be heard.
And so the story goes.
Landlords are too often chasing their rent payments down the proverbial rabbit hole only to find themselves trapped in a quasi-Wonderlandish realm with no way of recouping their money.
The most common dispute between landlords and tenants is late rent payments.
When tenants fail to pay their rent on time, a number of problems can arise. It can cause financial outtake, stress, and even legal issues.
Yes, tenants are humans too. They can forget. However, this isn’t always the case.
Whichever way you try to look at it, though, it’s irresponsible and a violation of the lease agreement.
One way of preventing rent-related issues is by thoroughly screening all tenants.
First, make sure the prospective tenant is earning no less than two-and-a half times the rental price. You can verify the prospective renter’s income by calling their employer.
You just want to confirm whether or not they are being honest about their income.
Second, check their credit history. If they have a good credit history, chances are high that they will pay their rent without delay.
Third, check their rental history. Call their previous landlords and inquire about the prospective renter. The questions can include:
- Would you rent to this person again?
- Was the renter a good communicator?
- Did the tenant take good care of the home?
- And most importantly, did the tenant pay their rent on time and in full?
By doing this, you’ll help prevent late rental payments and while simultaneously assessing their level of responsibility and ability to pay.
But, despite your screening efforts, what should you do in the event your tenant fails to pay rent?
How to Prevent Rent-Related Issues
Well your best bet is to make your tenants’ lives easier and motivate them to pay rent on time. A lot of this comes down to basic planning. Be proactive about it and think ahead.
1. Clear Communication
Review your lease or rental agreement. Is it clear on all the important details pertaining to rent? Such details include:
- The exact amount of rent due at the end of the month
- When rent is due. Generally, this is the first of every month.
- The grace period, if applicable
- Acceptable payment methods
- The late fee, if applicable
- Penalties for checks that bounce
By being clear on such details, you’ll help ward off payment problems in the future.
Additionally, try building a good relationship with your tenant. This will help improve communication between the two of you.
2. Allow your tenants to pay rent online
Who doesn’t like convenience?
Having modern property management software that allows tenants to pay online is vital to the success of your business. Make it easy for your tenants. Allowing tenants to pay online is one of the best ways to collect rent.
Aside from the convenience that it brings, online rent payments can help you:
- Save money. Manually handling checks can be both costly and time-consuming.
- Save your tenant’s time. Allowing your tenants to pay online saves them time too.
- Stay competitive. Today’s renters are tech savvy. By giving them what they want, it can get you ahead of your competitors.
- Save your staff time. Would you rather they help close leases or spend their time sitting chasing renters?
Steps to Take When a Tenant Stops Paying Rent
1. Follow all Rental Laws
So, what should you do when your tenant stops paying rent?
Do you by chance do any of these?
- Start harassing them in the hopes they will move out?
- Turn off their utilities so they have no access to gas, electricity or hot water?
- Remove all of their possessions from their property?
- Change locks on all of their doors so they cannot enter their own home?
Well, doing any of these things is not only against the law, but it can also be dangerous.
Whatever the violation, you can only evict a tenant by following the guidelines of the law.
Firstly, consult your lease agreement the moment your tenant stops paying rent.
What does it say your next move should be?
Is there a grace period?
If so, has it lapsed?
If it has lapsed, how much is the late rent fee?
Once you’ve confirmed that the renter is indeed delayed on rent, take the next course of action: send them a nonpayment notice.
2. Document All Communications
If you decide to send the tenant a nonpayment notice, ensure you document how and when it’s done.
Sometimes landlords deliver it in person. Other times, it’s posted on the front door.
Basically, a late rent notice gives the tenant two options:
(1) to pay rent due in “x” amount of days
(2) move out.
These notices are technically the first step in the eviction process.
Please keep in mind that different states may have different terms in regard to these notices. So, be sure to check your local rental laws prior to sending your tenant one.
You also want to document all your correspondence.
Save all emails and texts.
Having these can help you solidify what happened and when.
3. Always Keep Track of Payment Records
Documenting payment records will help your case, should things take a legal turn.
Track when you receive payments and from whom you received them. Also, don’t accept partial rent payments.
Your tenant can use it as a defense in court to derail their eviction.
Do you allow roommates? If so, remember that you can demand rent from any of them. The same thing goes for co-signers and guarantors.
How to Deal with Bounced Checks
What do you do when a check bounces? While it can be frustrating, stay calm and professional when contacting the renter.
Usually, they will apologize and fix the situation as soon as they are able to.
But if they don’t act immediately, remind them that they risk having late fees added.
If they continue being late, then consider sending them a late rent notice.
Some states have rules that permit landlords to charge an extra fee. Check to see whether your state has such rules. If it does, then act accordingly.
Collecting late rent can be one of the most frustrating parts of being a landlord. It can affect your ability to pay for things like utilities and mortgage payments.
Communication is the key.