Collecting rent is the most important responsibility in property management. Your whole purpose is to manage the relationship between the tenant and the property, such that the property produces a monthly profit for the owner. The reality of collecting rent from tenants is that most people who rent do not have significant amounts of cash, and often live paycheck to paycheck. So what happens if a tenant’s paycheck is delayed, or they have a major expense that is unexpected – in this case, since funds are so tightly budgeted, if your tenant falls behind on rent even once, it can be challenging to catch up.
There are steps you can take to ensure that your tenants will pay on time and in full. The key here is to have solid established policies and procedures, and being firm in the way that you enforce rent collection. You would also do yourself a great service if you have established positive relationships with your tenants such that they feel compelled to be sure you are paid first. Naturally one of the best ways to ensure you won’t have problems collecting rent is through your initial marketing and screening process – but sometimes that doesn’t solve all of your problems.
When showing a unit to a prospective tenant and they show interest, rent collection should be one of the first things you discuss. Make your policies clear and simple – “Rent is due by the 5th. You can turn it in person, via the dropbox here, or via our online rent payment system” (for example).
If you use a program like Propertyware, then you have a perfect system set up for people who are comfortable making electronic payments. These sorts of systems allow for easy direct instant payment. They can also be set up to automatically notify tenants when payments are due, and particularly with Propertyware they can be done via mobile.
Consider utilizing a web based payment system like this, and you can provide benefits to your tenants for utilizing it over check payments. The advantage to you is that you get payments much faster and without any potential hassle of having to keep track of physical checks. Previously I have talked about setting up promotions that you can run for tenants who turn in their rent checks on the first day – these can also be used for tenants who decide to use the web based system. Call it your ‘going green’ initiative, and you score some extra points for being eco-friendly.
The easier it is for your tenants, the easier it is for you and the happier they will be. Aside from these systems, there are other things you should consider. Tomorrow we will talk about establishing your rent collection policy, and what you should consider there.