Cash flow matters. In fact, monthly cash flow likely is the reason you became a landlord.
Late rent payments mess with that goal. You don’t have to sit back, cross your fingers and hope that your tenants will pay on time each month. You can be proactive with property management policies that are designed to keep that cash rolling in.
There are three pillars that bolster your cash flow goals. Think of it as the ABC’s of cash flow:
Adopt Aggressive Rent Collection Policies
Landlords can’t afford to be apathetic when it comes to rent collection. Don’t pine away, checking the mail each day for rent checks when your tenants have either spaced it out or are treating you like their personal banker.
If getting paid rent on time each month is the main objective of your lease agreement, then put your energies into policies that increase the odds:
1. Let new tenants know you’re not kidding around — late rent will have consequences, and on-time rent will have rewards.
2. Invoice tenants each month so they don’t forget the deadlines.
3. Send back a receipt — and a thank you for each on time payment.
4. If you offer a grace period in the lease, make it short. Every good marketer knows you need to have a call to action. A grace period sends a mixed message, and may train tenants to pay late.
5. Use every payment option at your disposal, like automated rent payment options, personal checks and money orders, and allow in-person drop off at a leasing office — in exchange for some decent coffee and cookies.
6. If you are choosing tenants with good credit, they will want to keep it that way. Sign them up to Report Tenant Pay Habits, so that good behavior will benefit their credit. They won’t want to risk the alternative.
7. Deposit checks right away. Tenants watch and become disgruntled if they scrambled to pay on time yet you sit on the check.
Be a Better Landlord
They say that opposites attract, but that’s not the case with rental properties. Good landlords attract good tenants. Bad landlords have to sift through what’s left.
Sure, location is important when choosing a home, but it’s great service that rules when it comes to settling into a rental property.
Rents are increasing, along with rent-to-income ratios, so tenants are expecting more value for their money. A responsive landlord is the best amenity you can offer.
Given the reach of the Internet, it is no longer possible for an apathetic landlord or property manager to avoid negative comments from former, current and prospective tenants. Apartment seekers care what others have said about you. The best tenants can be choosy. If you chase them away, someone else will snatch them up in a hearbeat.
What can you do to be a better landlord?
1. Have all your paperwork in order. You must stay in control during the leasing process and guide the tenants so they understand their rights and responsibilities.
2. Make sure the unit is completely restored — clean and in good repair — before the next tenant moves in. If you don’t care, they won’t care, and that can lead to passive-aggressive late rent payments.
3. Never sit on repairs or tenant concerns. Remember, a tenancy is a two-way bargain. Nothing triggers late rent payments like the frustration of not being able to use some portion of the apartment or building because it’s broken down.
Choose the Right Tenants
Maybe you have the most ironclad lease or the most intimidating late fees provision in the world, but no amount of legal muscle can make a good tenant out of a bad one.
The best way to protect your cash flow is to rent to tenants who have a history of making on-time rent payments, so take a few moments and run a tenant credit report. Follow up with the previous landlord and see where things stand.
A respectable credit history shows that the applicant cares about his or her financial obligations. That’s the kind of tenant you want.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
Click Here to Receive Landlord Credit Reports.
Disclaimer: The information provided in this post in 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.