A common problem for property owners is getting their tenants to pay on time. Although during the course of the tenancy your tenant may face unexpected financial difficulties that may cause them to fall behind on their rent, the following tips I have found are proven, effective methods to make it easier to get your tenants to pay on time.
1. Organise a Method of Payment
Prior to handing over the keys to your tenants, organise a payment method like direct debit, sign a document, and state procedures on how rent is expected to be paid and what happens if the tenant falls behind on rent. This will spare you and your tenant from worrying about each month’s rent because you will both know it’s going to be paid. Direct debit is a practical payment method for your tenants to pay rent because by using this method, the monthly rent due is taken directly from the tenant’s account on a scheduled date and transferred in your account. If direct debit is not an option, ask your tenant to schedule a routine transaction from their bank account to your account.
2. Procedures for Late Rent
Although it is important to thoroughly go through and have your tenant sign a lease agreement prior to renting out the property, it does not state the procedures you will take if your tenant falls behind on rent. So, you need to decide what actions you will take if this happens and make sure your tenant understands what will happen if rent is late. For example, you may enforce the following procedures: The tenant will receive a phone call if one day late on rent; You will send the tenant an email and letter if rent falls behind by 3 days; By 5 days late on rent, you will have a more serious phone call with the tenant as well as send a letter. You would have these procedures in place until the tenant falls behind on rent by 14 days and then you will send the tenant a termination notice. If you have these procedures in place in the beginning, then the tenant will know exactly what is expected and so there will be no arguments later.
3. Be Consistent
Once the tenant has started their rent payments, be sure to strictly enforce these terms. It is important to be consistent and firm to show your tenants that paying rent on time is not something you take lightly. Tell your tenant you expect the rent payment the day its due and if it falls behind by 14 days, then you’ll be giving them a termination notice.
4. Partial Payment
As stated before, sometimes tenant’s face unexpected financial difficulties, like a family tragedy, so considering a partial payment may be an option. However this option should only be offered if you’ve tried every other way to get the tenant to pay in full. Although its important to be understanding, at the same time a property owner should be firm and consistent so the tenant doesn’t expect to be able to make a partial payment every month. In 99% of cases, I have stuck to my plan of notices regardless of the tenant’s excuse. For example, I had one tenant whose father was dying from cancer. However, I still followed through with my set procedures for late payment of rent and hesitantly had to give her a 14 day termination notice. The tenant understood though because I had laid out all the procedures for late rent in the beginning. Obviously I was very sympathetic in all my dealings with her but I had to follow my procedures.