Rent payments can be a worry if you are a landlord. Currently, around five million households are behind on their rent. That's a big dent in potential returns from real estate assets.
But you can take a proactive approach to rent collection and minimize the odds of problems. Here are some dos and don'ts with how to collect rent from tenants.
Do Use a Formal Lease Agreement
A robust lease agreement is the best way to protect your property investment. Get professional support to put one together.
Write clear terms on when and how you will collect rent from the tenant and the late fees you charge if the rent isn't paid on time.
Should the worst happen and you evict a non-paying tenant, that lease agreement can help protect you if the matter goes to court.
Don't Ignore the Law
State laws are there to guide landlords and protect tenants, including rules on collecting rent. It's essential to read the most recent regulations and keep abreast of any changes.
For example, there are rules over how and when you can charge late fees for a tenant. Staying compliant will help protect you from legal claims from tenants.
Do Communicate With Tenants
Effective communication with your tenants will help avoid rent issues spiraling. And it's an excellent way to build a stronger relationship with your tenants, which can benefit you in many ways.
Make sure your tenant has your phone number. If they have an issue with the rent, find out why and talk through a temporary workaround.
Don't Ignore Technology
Technology can be your best friend when it comes to rent collection. An online portal can help you and your tenants track dates and send rent reminders for late payments.
It enables you to become more efficient with your rent collection. It's preferable for your tenant, too, as they get all their payment information in one place.
Do Provide Receipts
You must keep records of all payments. So always provide some form of receipt to your tenant once they've paid their rent.
That's easy in the digital era; most payments will happen via bank transfers or a dedicated platform for automatic payments. Keep your payment records organized. You may need them in the future.
Don't Intimidate Tenants
It can feel frustrating when a tenant fails to pay on time. But you must stay calm and objective. Communicating with your tenant is sensible, so start with a friendly reminder via text or email.
A phone call is the obvious next step if you don't hear back. But don't go overboard. Excess phone calls or texts could result in a formal complaint from your tenant.
Keeping Rent Collection on Track
Don't forget that the rent you receive is your investment income, so it needs special attention. Use these tips to guide you with your rent collection.
Getting expert help is often the best way to take the worry out of this process. That's where PMI Navigate can help. Our team has lots of experience in collecting rent on behalf of tenants. Find out more here.
