As a property manager, you're responsible for making sure the properties you manage have a consistent revenue stream. It should be simple, right? You fund improvements and maintenance, and tenants pay the rent. Unfortunately, handling rent payments isn't always straightforward. If you want to learn how to get renters to pay rent on time, follow these tips:
First and foremost, you need to be clear about the rules around rent payments. What do your local tenancy regulations state about late payments? As you introduce tenants to the property and engage in discussion with them about the rental, be clear about the monthly rental fees and any extras that they need to pay. Help them understand the payment structure: for example, according to the Bigger Pockets blog, you might "structure your lease agreement so that the rent payment is $25-50 higher than what you really want, but then provide a $25-50 discount when payments are made on or before the 1st of the month." Your goal is to avoid confusion about any of the rental fees and make payment smooth and simple.
Choose Those Who Pay
As a rental property manager or agency, you don't need to approve the first tenant who walks through the door. While you may be highly motivated to rent the property, it's important to first engage in a reference check and a credit check. Make sure your prospective tenants are people with a history of paying on time, and that they have the cash flow and credit necessary to be prompt with payments.
Make it Simple
If you're still relying on the rent payment that's in the mail, you're relying on your tenants to sign the check and mail it on time, and you're relying on the mail service to get it to you in a timely fashion. Avoid postal system woes and implement online payment systems instead. Through a tenant portal, your tenants will be able to see what they owe and what it's for and answer common questions about their monthly rental fees. A tenant portal makes payment quick and convenient for your tenants, and funds can be in your account much faster.
While you need to be clear on late payment fees and other disincentives for paying late, it's also helpful to have programs that reward on-time payments. Consider offering incentives to consistent tenants with percentage discounts, or sending a gift basket as a thank you. You can encourage people to sign up for online payments by offering an online payment discount. Those who pay early can receive a special rate to thank them for planning ahead.
As you work to become a more efficient property management company, keep track of your payments using software that's designed for your needs. Learn more about Propertyware and how it can help your business reach optimal success: Sign up for a free trial today.