Collecting the rent on time is the life blood of every property management portfolio because if the rent is not collected on time the owner of the property obviously has to cover the mortgage payment out of their own pocket.
In this article you will learn several tips for collecting the rent on time and reducing late payments.
#1: Change the Payment Due Date
If you rely on certain payments to pay your own bills—for instance, to pay the mortgage on your rental property—adjust the payment due date to at least a week before they're due. This gives you more wiggle room in case payments come in a day or two late. Of course, be sure to give residents plenty of notice before you implement this policy so that they have time to adjust accordingly.
#2: Create a Payment Reminder System
Implement a payment reminder system to ensure that residents are aware of upcoming payments. As a general rule of thumb, we like reminding people 3 days before a payment is due, the day that a payment is due, and then a day after the payment is due telling them that their payment is now late. There are all sorts of sophisticated web tools you can use to do this, but even a rudimentary email blast will do the trick.
#3: Increase Communication with Late Payers
If you have a resident who is routinely late in submitting payments, reach out to that person directly. Try to figure out if there's a special circumstance that prevents that person from paying on time. For instance, they might not receive the paycheck or child support payments that they use to pay their rent until after the rent is due. In circumstances like these, you may propose an agreement where that resident pays you on a slightly different timeline than others.
#4: Start Collecting Late Fees
Many leases and HOA agreements stipulate that overdue payments will be subject to a late fee. However, some landlords, property managers, and HOAs are lenient when it comes to enforcing these fees. Start implementing your late fee policy and collecting fines. Late fees might come as a jolt to some—but can be exactly what's needed to get people to pay you on time.
A few notes on implementing late fee policies:
- Be sure that you implement the late fee policy fairly and consistently.
- Allow for any "grace period" provided in the lease or HOA agreement.
- Payments sent by, but not received or cleared by the bank by the specified date, are typically considered late.
- Be sure to document all communication with residents regarding late fees.
#5: Enable Electronic Payments and Make them Automatic
This is the best way to collect rent. We're a big fan of software that allows residents to make payments online, such as many property management software solutions. In this day and age, we're all busy. Having to physically write a check, track down a stamp, and trek to the post office to mail a payment is a hassle. Some will certainly prefer to make payments that way; but if you want to collect payments on time, leveraging electronic payments will make it easier for you to do so.
#6: Improve Your Resident Screening Process
There will always be one-off cases of residents paying late. However, if you find that multiple residents are making late payments more often than not, it could mean that your tenant screening process is in need of a few tweaks. Be sure that you're calling landlord references, confirming proof of employment, setting guidelines for minimum income required to lease, etc. This should help to ensure that you're choosing high-quality residents who can afford to make their payments each month.
Contact Blackbird Realty And Management
To learn more tips you can use for collecting the rent on time and reducing late payments contact Blackbird Realty today by calling us at (702) 903-3556 or click here.