Are you a landlord or a banker? The distinction may not be so clear to your tenants.
With increasing rental regulations and political rhetoric painting tenants as victims and access to rental housing as a right, bad tenants are emboldened to take advantage by signing a tenancy agreement and paying late — or not at all, knowing it could take the landlord months to get an eviction order.
While tenants are not paying rent, they are free to apply their money to more pressing creditors — phones, cars, credit cards. Those creditors provide immediate consequences, like discontinuing service. For landlords, accountability is a little tougher.
Fortunately, there are some strategies that allow landlords to be landlords, not money lenders:
When running a tenant background check, ask the previous landlord if the applicant missed payments or paid late, AND what the landlord did about it. Did this applicant get away with it?
Avoid providing a grace period or late fees in the tenancy agreement. This encourages renters to pay late, use the money for something else, and suffer the nominal consequences rather than paying on the due date.
Report Rent Payments to a credit bureau. Include the Notice to Tenant in the tenancy agreement and go over the Notice with the tenant at lease signing. Knowing there are consequences might hinder the tenant who is considering exercising their “line of credit” by paying late and then making up the rent payment later.
React when a tenant pays late. Report the late payment and prepare to take legal action. Do not look the other way or bargain with the tenant to pay in installments. Once a tenant sees the opening, it may happen again — and again.
Investigate automated payment options that allow the landlord to process rent payments on the due dates.
Send a reminder to tenants a week or 10 days prior to the rent due date.
Report tenants who have defaulted on rent to Landlord Credit Bureau. This database is available for the next landlord to search and provides accountability.
Provide a landlord reference to future landlords so bad tenants cannot use loopholes in the eviction process to their advantage.
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 is 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.