Monthly cash flow is probably the number one reason you became a landlord.
What should be a well-oiled machine quickly turns into a headache when rent payments are routinely late.
Don’t cross your fingers and hope that the rent cheques come in on time each month. Be proactive and keep that rental income stream a steady flow:
Rent Collection Policies: A Preemptive Strike
Don’t sit back and wait for tenants to decide when they are going to pay. If the rent cheque is late, it could be that the tenant forgot, or has decided to treat the lease like a revolving line of credit. Don’t stand for it. Better yet, take some steps that increase the chances for on-time rent payments:
1. Lay down the law with new tenants. Of course, first you must know the law. Understand when rent is late, and when you can act. Prove to the tenants that you are going to enforce the on-time payment rule. Otherwise, tenants will think you are bluffing, and late payments will continue.
2. Send invoices or reminders about 10 days out. Tenants are accustomed to paying bills when they arrive or sorting through the pile at the first of the month. Make sure yours is in the stack.
3. Stay in touch with tenants. An easy method is sending monthly payment confirmation or rent receipts. If the tenant pays on time, thank them. They will look forward to that little reward next time around.
4. Deposit rent cheques right away. Many tenants monitor their bank withdrawals in real time online. Demanding money on the 1st, but failing to deposit those funds until the end of the month sends a mixed signal.
5. Make it easy for tenants to pay rent by accepting many different payment vehicles, including electronic and automated payment options.
6. Focus on rental applicants with good credit. These are the tenants who have something to lose by paying late.
7. Look into TVS’s option to Report Tenant Pay Habits. This can serve as both deterrent and incentive.
Focus on Being a Good Landlord
You’ve heard the saying that opposites attract, but that’s not true when it comes to landlords and tenants. Good landlords attract good tenants. Bad landlords get what’s left.
Often, a tenant’s top priority is good service. In fact, great property management can be just as important as location when choosing a rental property.
In today’s rental market, tenants are paying more and using a higher portion of income to make rent. No doubt tenants are expecting to get their money’s worth. Offering good service is the best way to attract the best tenants.
The lease agreement is a two-way street. If you meet your responsibilities, like keeping the property in good repair and responding to tenant needs, your tenants are more likely to want to stay in the unit — and in your good graces.
Choose the Right Tenants
You can wield the best lease agreement on the planet, but no amount of legalese can form a good tenant from a bad one.
If you are serious about protecting your cash flow, you need to look for tenants who have the what it takes to make on-time rent payments. Verified income, decent credit, and a history of making rent payments on time are all important indicators of the type of tenant you want to attract to your property.
Take a few moments to run a tenant credit report. Follow up with the previous landlord and see where things stand. Good credit and good rental history show a sense of responsibility. That’s the right kind of tenant for any rental property.
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.