Landlords rely on and trust tenants to pay their rent on time and in full. Rent is a sizeable portion of a landlord’s income, and it makes up the budget that allows landlords to pay for upgrades, repairs, and many other important expenses. If payments don’t come in time, landlords have difficulty budgeting properly and can experience financial strain. If you’re a landlord struggling with late payments, read on for strategies that will encourage tenants to pay rent on time.
Communicate Expectations Early On
Your lease agreement should set clear expectations on when and how to pay rent, due dates, and late fees. It should also be something that you verbally state before the move-in date. Giving tenants both written and verbal instructions signals to them early on that you’re serious about them paying rent on time and that they should be too. This also leaves little room for ambiguity, and tenants can’t say they don’t know how or when to pay their rent.
Send Consistent Reminders
Like you, tenants often have very busy lives, and even if they know how important it is to pay their rent on time, they might still forget. Once a month, a few days before the due date, send a reminder that their rent is due. Providing consistent reminders and updates is a great way to sustain proper communication with your tenants and ensure everyone is on the same page. You can send them an invoice, email, or text. If you use a phone application, you can set up automatic notifications.
Have Consequences for Late Payments
Regarding consequences for late payments, you have two options: you can either enforce a late fee or report their late payment to the credit bureau. Keeping a good credit score is important to many tenants, and a late payment report can impact their score. Remember that you can only do so 30 days past the due date and must notify the tenant beforehand.
As for the late fees, limits on the amount you can charge vary from state to state, and you have to put your late fee policy in the lease agreement. However, many tenants will do whatever they can to avoid paying extra.
Make Paying Rent Easy
Giving your tenants multiple and easily accessible ways to pay their rent can make a world of difference. If you only allow tenants to pay through mail or check deposit, rent is bound to come in late occasionally. Allow tenants to pay their rent online or through automatic payments on a banking app. This way, if they forget, the app will handle the payment for them every time. Ultimately, the best way to encourage tenants to pay their rent on time is to make it as simple as possible. The easier and more convenient it is for them to pay rent, the more likely you are to receive it on time.
