Rent collection seems like it should be the easiest and most basic part of being a landlord. After all, you and your residents sign a lease agreement that establishes they will pay a specific amount every month in exchange for the home in which they will live. However, many of the rental property owners we talk to complain that collecting rent actually can be one of the most challenging aspects of managing rental properties.
Why? Because there’s not always a clear process in place. There aren’t consequences that are enforced nor accountability that’s required.
Late payments, checks returned for insufficient funds, and endless excuses can quickly turn what ought to be a smooth transaction into a frustrating ordeal.
It does not have to be this way. While there’s no guaranteed way to ensure that all your tenants will pay rent on time, there are some best practices that can help minimize issues and keep rent collection on point.
Our experience as Jackson property managers has allowed us to put together some airtight rent collection policies that are clear, consistent, and easily communicated. We’re direct with our residents, and they know what to expect even before they move into their rental home.
We’re sharing some of our best tips and strategies that savvy landlords in Jackson can use to make rent collection a breeze.
The first step in ensuring timely rent payments is to establish a rent collection policy. Write out a separate policy that can be included in your lease agreement and provided to your tenants as a document that they can refer to when necessary.
A good rent collection policy sets clear expectations and deadlines from the start.
When you’re screening potential tenants and discussing the particulars of the lease agreement, make sure to discuss your expectations around rent payment and any fees or penalties for late payment. Once your tenants are in place, provide them with a clear schedule of when rent is due and any fees associated with late payment. You can also consider setting up automatic payments to make it easier for tenants to meet their obligations.
Your complete rent collection policy will include:
A good rent collection policy is your early defense against unpaid or late rent. When your tenants understand your expectations and their responsibilities, there’s no reason for any confusion or claims that they didn’t know rent was due.
We mentioned that your rent collection policy must include all the ways in which you’re willing to collect rent.
It’s important that you’re flexible and willing to entertain different types of payment methods. Online payments are most popular because they’re very convenient and tenants don’t have to do much in order to pay you. With may platforms and apps, they can simply save their bank account or credit/debit card information, and transfer money to you when it’s time.
Some tenants still are not comfortable with paying online, however, and they definitely don’t like the idea of an app or a website storing their financial information. These residents may need to pay with a check or some other more traditional payment method.
We don’t recommend that you accept cash because it’s risky; however if tenants are insistent on paying by cash, you can partner with retailers such as Walmart or 7-11. Those stores will collect the cash from tenants and then credit your online account with the payment.
Providing multiple ways to pay is an excellent way to ensure that rent comes in on time. Make it as easy as possible for your tenants to pay.
Clear communication is essential for successful rent collection. Make sure to touch base with tenants regularly and address any potential issues before they become major problems. If a tenant is experiencing financial difficulties, consider setting up a payment plan to help them catch up without falling too far behind. By keeping the lines of communication open, you can build trust with your tenants and make it easier to address any issues that may arise.
You have to be willing to listen. When tenants can trust you to hear their struggles and to work with them, they’ll be more likely to get rent paid as quickly as possible.
This does not mean you should waive late fees or ignore those late payments. When the rent due date has come and gone and any grace periods are over, make sure to contact your tenants if the rent has not come in. It’s possible they simply forgot. Maybe they need an extra day or two.
If they need more time because they’re experiencing a financial difficulty, put together a plan for bringing them up to date. If it’s a consistent issue for a tenant, this might indicate a larger problem. But, if there just happens to be one random month where an otherwise good resident is struggling, it’s better to work with them so you can preserve your relationship and ultimately get the rent paid.
Accurate record-keeping is crucial when it comes to rent collection for your Jackson rental property.
Make sure to document all payments that come in, including amounts and payment dates. If there’s additional correspondence or communication around payment, keep those records as well.
When it comes to documenting your communication and rent collection actions, you can use software or an online platform to help streamline this process and ensure that you’re always up-to-date on who has paid and who is behind. This will not only help you keep track of rent collection, but it can also serve as a valuable resource in the event of a dispute or a conflict which may take you to court. If you find yourself having to evict, you’ll need all the paperwork you can provide.
When it comes to rent collection, we have found that landlords tend to be either impossibly rigid or too accommodating. Striking a right balance is important; you want to be firm and consistent, but also fair and empathetic.
Always enforce your policies around late payment and penalties. However, be open to leniency when it’s appropriate. Offering some flexibility in the form of a short-term payment plan or waived late fee can actually provide some great value to both you and your tenant; you’ll have an appreciative resident who is more willing to pay on time in the future and ultimately renew their lease agreement. By balancing strict enforcement with compassion, you can create a positive and productive relationship with your tenants.
If you’re struggling with rent collection or would rather leave it to the experts, consider hiring a property management company in Jackson to handle rent collection on your behalf. Property management companies can provide a range of services, including rent collection, property maintenance, and tenant screening. Many owners find that this takes a lot of the hassle and stress out of collecting rent and enjoying a profitable and pleasant investment experience.
You’ll also need to be prepared for eviction if the situation escalates and your residents show no willingness or ability to pay the rent that’s overdue. At this point, there are legal documents and notices involved, and you’ll have to file for the eviction action in court. You’ll always want some expert help at that point, whether it’s a Jackson property manager or an experienced attorney who understands state eviction laws.
Rent collection doesn’t have to be a headache. By setting clear expectations, communicating regularly, keeping accurate records, being firm but fair, and considering a property management partner, you can make sure that rent collection runs smoothly and without issue.
If you’d like some help bringing rent in on time, please don’t hesitate to contact us at Lucroy Residential.