A Multi-Family Home

Tips For Making Sure Your Tenants Pay Their Rent On Time

by Arnold Gomez

Being a property manager can be a lucrative business if you are good at managing the cash flow of your tenants and collecting rent. In fact, one of the biggest deciding factors in whether or not you are a successful property manager is your ability to collect rent. Unfortunately, tenants may or may not be the most fiscally responsible people. For this reason, it is up to you to find ways to make them pay the rent on time if you want to be a successful property manager.

Offer an Automatic Payment System

One of the easiest ways to make sure you get your money every month is to set up an automatic payment system. You can set up a system that will automatically pull money from your tenant's bank account and deposit it to your bank account every month on a specific day. This option is extremely beneficial because it eliminates human error as your tenant can no longer "forget" to pay. In this set up, the only issue you would have is if your tenant does not have the money to pay the rent.

Be Wise About Who You Rent To

This might seem like an obvious tip, but you have to be cautious about who you are renting your properties to. You want to check the rental and credit history of people before you rent to them. You want to make sure your tenant can actually pay the rent, so the industry standard is to make sure your potential tenant makes two and a half to three times the rent in monthly income.

Establish a "No Cash" Policy

Allowing your tenants to pay their rent with a cash payment can be very messy. Cash is very easy to misplace; and there is no paper trail of the payments being made. Just establish a no cash policy and require your tenants to pay by debit card, check, money order, or direct deposit.

Enforce a Strict Rent Collection Policy

Within your lease agreement you need to establish when rent is due and when rent is late. Be clear about late fees and how rent is to be paid. Then, it is vital to stick to your rent collection policy. It does not do you any good to have the policy if you are not going to enforce it. This is the only way your tenants will take you seriously.

Ask The Right Questions When Rent is Late

If your tenant informs you that he or she will be paying rent late, you need to ask the right questions. These questions will help you have a clear understanding of when you will be getting paid:

  • When will they be paying?
  • Will they be paying the full amount (including late fees)?
  • How will they be paying?
  • What is the source of the income they will be paying with?

If your tenant regularly pays his or her rent on time, you can consider giving him or her a small reward to show your appreciation. This is a great way to establish a positive relationship with your tenant to ensure he or she continues to pay. To learn more, contact a property management company like Management Services