Rent Collection, Best Practices And Must Read Tips For Landlords
Collecting rent from a tenant is the cornerstone of investing in rental properties. For some landlords, collecting rent is not difficult but for others it can be a real struggle.
Step One, Tenant Screening
Through screening is the first step to finding tenants that pay on time. Your best bet is to get a credit report, an eviction history report and perform a criminal background check on your tenants. All of which can be done online. You can also call the current or previous landlord(s) for a reference. Some landlords will also visit the property where the applicant is residing, checking the condition of the property and cleanliness of the tenant. But, do not settle for tenants that don't meet your qualifications, spend more time screening and checking your applicant's background and you will save a lot of time and problems in the future.
Rent collection Best Practices
You really need to be very consistent right from the beginning of the lease. Start out by explaining to your Tenants in detail, the terms of payments in the lease and the consequences of paying their rent late. You must set a precedent right from the beginning as soon as a tenant fails to pay rent on time. Once you start accepting excuses, you will have lost your footing. This will give the tenant the assumption that it is ok to pay the rent late if they have a good reason or excuse. The next time your tenant has a problem paying the rent, they will expect you to be understanding once again. This sets the tone for a frequently of late rent payments or worst an eventual legal matter.
Be sure to keep all communication in writing with your tenant to avoid the "he said, she said" scenario. Send your tenants a late notice as soon as rent becomes late. So, if the rent is due on the first and it is not received by the first, send a notice out on the second. As soon as a tenant owes a late fee, send them another notice and be sure to never wave the late fee. Don't make any special "deals" waving the late fees at anytime. As soon as you negotiate with your tenants, they will tend not to take you very seriously as a landlord and may try to push things even further. It's a good idea to setup a schedule to send out a sequence of late notices. Mark on a calendar when you will be sending these notices out, if need be.
Check with your local jurisdiction to find out the regulations for eviction. Each state, county and/or jurisdiction may institute requirements for how many days may pass before legal proceedings can be brought against the Tenant. There may be certain notices required such as a "Notice to Quit," before you may even file for eviction in a local court. If after several attempts are made to collect the past due rent, follow your jurisdiction rules as soon as possible. Eviction can be a lengthy battle so don't hesitate to file, you can always withdrawal if your tenant pays.
Be clear right from the beginning of the landlord/tenant relationship to set an example in your collection efforts. Do not get emotionally involved or feel sorry for a tenant's situation. Keep it business, after all you invested a lot of time and money in order to make money not lose money.
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