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For landlords, rent collection is a never-ending battle. Regardless of how thorough your screening procedure is, you’re bound to have at least one tenant who fails to pay their rent on time.
Even the most fantastic tenants aren’t always able to keep up with their monthly payments. Whether they go out of town and forget to send in their check or have a financial emergency, anything might happen. Whatever the case may be, it’s critical to make sure you’re receiving your rent collection on time.
However, it is understandable that there are situations where late rent payments may not be avoidable, and we want to help keep you protected. That is why we want to offer you a free strategy call at the link below to discuss options that can help secure your mortgage.
Consistency Is Essential for Rent Collection
You may wind up losing money every month if you don’t make consistent rental payments and struggle to keep up with your mortgage and running expenditures. The failure to make compatible, on-time rental payments will hinder your progress toward financial independence. It will also make it more difficult for you to make future real estate investment transactions.
If you’re having trouble getting your tenants to pay their rent on time, modify your technique right away! You’ll have to work hard to alter your tenants’ opinions of you as a landlord and redefine your relationship with them.
However, keep in mind that collecting tenant payments on time should be done with care to avoid damaging your landlord-tenant relationship.
Promoting on-time Payment
Encouragement, rather than pressure, is the most incredible method to get your tenants to keep up with your rent collection. Every tenant is aware that they must pay their rent by a specified date. Punishment is unlikely to have a beneficial consequence if they are not paying their rent on time. Instead, engage with your tenant to figure out what it will take for them to pay their rent on time. Consider one of the following strategies:
Maintain clear communication
Maintaining clear communication is one of the most important things you can do to ensure constant rent collection. Ask your tenant why regular rental payments are so important and if there’s anything you can do to make it more likely that they’ll keep their promises each month.
Inquire about payment defaults
If a formerly trustworthy tenant begins to fail to meet their rental obligations, inquire about any financial difficulties they may be experiencing. If at all possible, provide a different collection schedule. Such as if it’s preferable to receive your rental Payment on the 15th of each month rather than the 1st.
Consider offering small discounts or other forms of incentives for timely payments, or if the tenant agrees to use your preferred payment method. Even tiny discounts of 1% could go a long way toward encouraging your tenant to complete their financial responsibilities on time. This should only be availed as a last resort if you have a long-standing, positive connection with a previously reliable tenant.
Notify a credit bureau about your rent collection
Start reporting your tenants’ rental payments to a credit bureau if you haven’t previously. Tenants are rewarded for good behavior and punished for bad behavior in this manner. It will not be your responsibility to punish the tenants for late payments; rather, their credit score will suffer.
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Offer discount over bulk payments
Offering considerable discounts to tenants who pay rent in multi-month blocks is one approach to ensure you receive monthly payments on time. You should provide a substantial discount to tenants who are able and ready to pay for several months of rent in advance. This gives a significant, one-time financial boost to your investing firm.
Making Payments Easier
Making it easy for tenants to pay their rent on time is one strategy to encourage them. Here are a few methods to explore for making it easier for tenants to pay their rent on time at your rental property:
Accept debit cards for Payment
The majority of people nowadays use their debit cards daily. Debit cards are more common than cash and almost every other form of Payment. Consider providing your residents with an online debit card payment portal. This is an optional feature provided by many property management companies. It considerably decreases the stress that tenants experience when it comes to rent collection.
Consider credit card payment options
Credit card processing fees are generally higher than debit card processing fees. Paying the rent with a credit card can put the tenant in financial trouble, as credit cards have high interest rates that can trap them in unmanageable debt. On the other hand, offering this payment option allows tenants to pay their rent on time even if they don’t have cash.
Payments using electronic checks
Tenants can pay their rent straight from their bank account using an e-check payment mechanism. Tenants can generally set up this payment method as a recurring payment that is deducted automatically. This makes it simple for tenants to “set it and forget it,” considerably boosting the chances of getting paid on time. Consider providing a reward for using e-checks.
Accepting money orders
If you’re renting an apartment to the underbanked, such as an international student or a recent immigrant, getting checks to pay their rent without paying exorbitant foreign transaction costs can be problematic. As an alternate payment method, consider accepting money orders, which may be purchased with cash.
Don’t Let Your Rent Collection Become a Worry for You
Increasing the number of methods your tenants can pay their rent and lowering the effort required to do so will raise the likelihood of paying on time. Make it as convenient as possible for your tenants to pay their rent, and make sure you have a clear, open channel of contact where you can both express your concerns.
If you need to evict a tenant because they haven’t paid their rent on time, be sure you’re following all legal criteria. Remember to respect all applicable tenant rights in your area. And, of course, do everything you can to keep tenants who have a good payment history and who respect your property.
How Rent Collection Impacts Your Mortgage
Late rent payments can quickly put you in a difficult spot when it comes to your mortgage. That is why it is important that you take the time to properly insure and protect your mortgage against late payments and tenant complications.
If you would like to learn how to do so, you are in luck. We are currently offering a free strategy call in which we can show you how to insure and secure your mortgage. All you need to do to start is click the link below to book your free call now.