Measures to Put in Place to Encourage On-Time Rent Payment
For landlords, arguably the most important part of their role is collecting rent from their tenants every month. And while this would seem like a basic event that happens regularly, almost without thinking, some tenants create difficult situations when they fail to do so, accumulating late rent.
When tenants fail to pay the rent, many landlords might opt for eviction right away. While this is an option, there are a number of things that can be done to avoid any more controversy and still get paid in the late rent paid in full.
Here are some tips you can use to get that late rent paid and even encourage your tenants to submit payments when they are due.
Clear and Concise Communication
Communication is key when taking care of late rent situations. Make sure you’re clear about when the rent is due and outline any fees that come with late rent payments. This will help to keep tenants from paying late rent because they weren’t sure when the rent was in fact due.
Also, talk to your tenants about why they’re having trouble paying on time. Discuss whether changing the date of payment or method of paying would offer some help. Some tenants may like to pay on the first or last day of the month, and some may prefer to pay throughout the month in smaller payments. If these options are allowed, work with them on what is best.
Charge a Late Fee
If someone doesn’t like to pay rent, they definitely won’t like to pay a late fee. Charging an additional fee for late rent can help to ensure that tenants are motivated to pay in full and on time. Outline exactly how much will be charged and when based on state statutes. If tenants are consistently late, a penalty that’s small may not matter to them, but a major penalty may be too harsh. Find the right balance of fees to apply and make sure they are not up for interpretation.
Offer a Discount for On-Time Payment
Sometimes rewarding your tenants for paying on time may actually encourage them to do so every month. Consider offering a small discount for paying their rent in full and on time. A small percentage can provide enough incentive for them to pay and not create difficult situations every month.
Stay in Touch with the Credit Bureau
Credit checking bureaus can work with landlords to provide a service to report the status of rental payments. Since no one can benefit from taking a negative hit on their credit report, it may be enough of an incentive to get tenants to pay their rent and avoid late rent status. You can reward tenants who always pay their rent as well.
Invest in Rent Default Insurance
To keep from having to deal with major fines and fees for not submitting rent payments from your tenants, you can invest in tenant default insurance, which ensures that a landlord’s financial losses won’t harm them in a long-term capacity. Rent default insurance, which is meant to reimburse you for loss of rental income in the event of a defaulting tenant, is a financial backstop when the unexpected takes place.