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For rental properties to be profitable, landlords need to see cash flow. And that means having tenants who pay rent on time, every time.
Train your tenants to pay on time by incorporating these property management strategies that encourage good payment habits:
Report Rent Payment History
The ability to report rent payments each month to a credit bureau puts landlords on par with other creditors and is the most powerful tool landlords have when it comes to on-time payments. Tenants who would like to better their credit and rental history will be on board, and those who think it’s okay to lag behind on rent will have to think again.
Landlords who sign up to Report Rent Payments can include the Notice to Tenant in the lease agreement and educate tenants on their responsibilities regarding rent payments — and the consequences of paying late.
Offer Multiple Payment Options
A little flexibility can go a long way in encouraging tenants to pay on time. Many will prefer online or automated methods of payment, so check with your bank or payment providers to understand the options. Requiring cumbersome methods of payment, like cash or money orders, can slow the rent payment process for tenants who have a difficult time getting to the bank or grocery store in time.
While multiple options are a good thing, some electronic payment methods, like PayPal, give tenants control over when payments are deducted. The point of automated payments is for the landlord to receive the money at a predetermined time.
It is preferable to use electronic payment methods that allow landlords to prevent tenants from making partial payments. That can be a problem if the tenant is in default or if the eviction process already has begun.
Invoice Tenants to Pay Rent
Some late payments are innocent, with tenants simply caught up in everyday hustle and bustle. That’s why many tenants prefer automated payments.
Don’t expect tenants to remember the date. All of their other creditors send out invoices or collect payments automatically. Sending out a reminder notice 5-7 days before the rent payment is due can make a significant difference in cash flow.
Remember to acknowledge the payment with a rent receipt or a simple thank-you email. That positive reinforcement will serve as a reward for on-time payments.
The landlords most likely to see late rent payments — and property damage and broken leases — are those who live far away. The act of requiring the tenant to mail the check to some far-off location serves as a reminder that the landlord is not around to hold the tenant accountable. Even the best tenants can become disgruntled over having to take on too much responsibility.
Avoid this risky situation by hiring a property manager to collect the rent. Other options include automated rent payments, or having a friend or colleague pick up the check from a local address.
Deposit the Checks Promptly
Tenants easily can track exactly when the landlord deposits the rent. And they are watching! Cajoling, threatening or warning a tenant to pay on time won’t work if the tenant sees that the landlord holds on to rent checks for days — or weeks.
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This post is provided by the Landlord Credit Bureau to help landlords and property managers reduce the risks of rental income loss and avoid rent theft. The Landlord Credit Bureau provides articles on Reporting Tenant Rent Pay and Tenant Screening to ensure necessary information is readily available to all Landlord & Tenants.
The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.