Finding a tenant is only the first step in running a successful rental property portfolio. Having said that, collecting rent is as equally important. You may have spent hours screening your new tenant, but they will ultimately be judged on the first of every month. Rent collection is the payoff for all your hard work. You should never just assume that your tenant knows how, where and even when to send their monthly payments. You should make rent collection as simple and easy for them as possible. If not, you run the risk of rent collection becoming a nuisance, or worse, every month.
Start by setting firm dates, responsibilities and consequences. As basic as this seems, it cannot be stressed just how important these factors are. One of the most important things in any lease deals with rent collection and consequences. You cannot just glaze over these details and move on to the next point. At the lease signing, you can set a tone for how you want the relationship to go. In other words, don’t give them an ultimatum. You don’t need to go overboard and say “if it is not in your hands by the first, you are starting the eviction process” either. Find a balance that works for you, but stress just how important it is. If you give them until the fifth of the month, make sure they know that you can charge a $25 or $50 fine if received after. Eviction can start as soon as they are at least ten days late. You also need to let them know where, when and how to send the payment. There are numerous ways to do so. Here are a few rent collection options:
As a landlord there is an expectation to get the rent by the first every month. While nice, this is not always very realistic. One way to entice tenants to pay by a designated date is to offer some incentive. If they pay on or before the first for a certain number of consecutive months, you may offer a small gift card or some other concession. Many landlords will scoff at this. However, is it worth $25 once every six months to get your rent by the first every month? Most investors would answer yes. Whatever you do and however you do it, find a system that works for you and be ready to run with it. The minute that you start to take rent collection for granted is when you will start to run into trouble. Without rent coming in on time, the whole process becomes much more difficult.
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