Late rent payments are best avoided. They disrupt your cash flow, take up a lot of time, and leave a sense of unease in the relationship with your Killeen tenants who are paying late.
How can you avoid late rent payments, and what should you do when you’re required to deal with late rent?
As professional Killeen property managers, we understand the frustration of late rent. We know the damage it can do to your own financial stability and to the way you run your rental business. We have some effective strategies that we’re wiling to share. These things allow us to collect rent on time for our owners and investors. You may find them useful.
Establish a Rent Collection Policy
To collect rent on time and avoid late payments, you’ll need to start with a solid rent collection policy. Having this policy in writing and sharing it with your tenants through your lease agreement will ensure that everyone understands what is expected when it comes to rental payments.
A thorough rent collection policy will include information about:
- How much rent is due every month.
- What date the rent is due and when it’s considered late (reference any grace periods).
- How rent should be paid.
- What to do if rent is going to be late.
You’ll want to be sure that your rent collection policy also includes information about what the penalties will be if rent is paid late. Disclose any late fees, and make sure the rent collection policy talks about the right of the landlord to pursue eviction if rent isn’t brought current within a specific amount of time.
Once you have a written rent collection policy, provide it to your tenants. You want to include it in your lease agreement, but also make sure you’re calling it out as an important part of that lease. It’s your expectation that tenants will pay on time. Reinforce this by providing a separate copy of the rent collection policy so there aren’t any surprises when they’re charged a late fee or they find a notice posted to their door.
Provide Several Ways for Killeen Tenants to Pay Rent
Ask any Killeen property management company about the preferred way for tenants to pay rent, and they’ll tell you it’s online rental payments. This is almost every tenant’s most desired way to pay. It’s easy, convenient, and secure. Very few people are writing out paper checks anymore.
Online rental payments are a standard operating procedure for property managers. As a landlord, you might not have access to the same software systems that we have. However, you can still download any number of payment platforms to accept rental payments electronically. Do this for your tenants who would prefer to pay digitally. They can send you funds directly from their bank account or a debit/credit card.
That’s the best way to collect rent on time, but it’s not the only way.
Some tenants will still prefer to pay with a written check. Or, they’ll want to mail a money order or even pay in cash. We don’t recommend that you accept cash as a rental payment, but you can contract with local companies and convenience stores to allow tenants to pay in cash at a different location, and then that payment will be sent to you electronically.
Offering options is the best way to ensure you get rent paid on time. Let tenants decide how they want to pay you every month, and be willing to accept that.
Keep Communication Open with Late Paying Tenants
We have given you some strategies for ensuring rent does come in on time.
What do you do when it doesn’t?
First, communicate with your tenants. It’s entirely possible they simply forgot to pay. Give them a call or send them a text to let them know that you have not received the rent and you’ll have to charge a late fee (if that’s part of your rent collection policy). Ask them when they’ll be paying.
If this was a simple oversight, your tenants will pay right away.
If the tenant is struggling to pay rent this month, you want to listen. When you’re open and empathetic, you have a better chance of ultimately getting the rent paid.
The worst case scenario is a tenant who does not respond to you at all. This is not a good sign, and you’ll likely have to take further action.
What’s most important at this stage is that you keep the lines of communication open. If your tenants have run into a financial hurdle and they just need a few more days to get the rent together, tell them that you appreciate their willingness to work quickly to catch up. Stay in touch so you know what to expect in terms of when and how rent will be paid.
Don’t ignore tenant phone calls and messages. Keeping the dialogue open and moving is critical when tenants owe you money.
Consider Payment Plans and Don’t Be Afraid to Move Towards Eviction
Preserving the tenant relationship is one of the most important parts of collecting late rent. It’s a definite problem that rent has not been paid yet, but you want to keep your tenant in place. Unless this late payment is indicative of a major change in life circumstances, you’d rather have your property occupied than vacant. If your tenants are unable to pay because of a divorce, job loss, illness, or some other matter, you may not want to fight too hard to keep them in place. These are financial situations that may be difficult to recover from, and late rent this month could lead to no rent next month.
However, in most cases, a late rent payment is not due to a major life event, but simply a matter of financial stress that’s temporary. Maybe your tenant had a large and unexpected expense, or their paycheck took a cut one particular month. These are the tenants you should be willing to work with when it comes to setting up payment plans and payment arrangements.
What does a payment arrangement look like when rent is late?
That depends on your tenant’s ability to pay. You might want to collect whatever they have as soon as possible. Maybe it’s half the rent now and half in two weeks. Or, you could have the tenants pay a specific amount over the next few weeks. Sometimes, tenants will be completely out of cash in the current month and need to divide up the amount that’s due and add it to the rental balance for the months coming up.
Your payment plan can be personalized to the tenant and their situation. What’s important is that you put it in writing and you hold your tenants accountable to it. Make sure the written payment agreement includes penalties for non-compliance. For example, if the tenant promises to pay by the 21st of the month, and that day comes and goes without a payment, you may have the agreement reflect that you’ll immediately serve a notice to vacate.
Eviction should always be a last resort.
You don’t want to immediately head to the courts as soon as your rent is late. It’s important to give your tenants a chance to catch up. However, if you find yourself unable to collect the late rent, no matter how willing you are to work with your tenants, eviction may be your only option.
Offer your tenants the opportunity to move out if it looks like they’re not going to come up with the money that they need to bring their account current. Sometimes, a voluntary move-out is better for everyone. It removes the threat of eviction from your tenants, and it allows you to get your property back faster and for less money than if you had to pursue an eviction.
When every other potential solution breaks down and you absolutely must evict your tenants, make sure you serve your Notice to Pay Rent or Vacate first. This lets the tenants know that you’re actively pursuing eviction unless they pay the overdue rent in the required number of days.
If it gets this far, we always recommend you work with a professional eviction attorney or someone who understands landlord and tenant laws. You’ll need the help navigating the legal system, because there are a lot of easy ways to make expensive mistakes.
Work with Killeen Property Managers
If you’re wondering how to avoid the drama of chasing down late rent altogether, we have a solution for you. Partner with a Killeen property management company. We have the tools and resources in place to ensure that rent is never paid late, and to ensure that landlords get all the support and resources they need, especially when it comes to rent collection and lease enforcement.
Let rent collection be our problem, not yours. When you’re ready to hand over the leasing, management, and maintenance to experienced professionals, please contact us at Shine Residential Management.
