By combining these four points you can dramatically reduce both late rent payments and the time and stress of chasing up missed rent.
Traditional methods of rent collection, like cash or check, are slow, insecure, and inconsistent. They cause stress for both parties involved and this inefficiency is a central reason for many late rent payments.
While there are numerous solutions on the market that allow you to more efficiently collect rent, there are very few which will also improve your income tracking and even less that will enable you to automate the entirety of the process.
In this article, we take a look at four things landlords need to consider when looking for solutions to optimize their rent collection processes.
Having clear guidelines and a strict qualifying checklist will help you select the best tenant from amongst the applicants. This should take into consideration things like income to rent ratio, credit history, previous landlord references, and eviction history.
While no amount of tenant screening can make you completely safe, you can drastically improve your chances of having tenants that consistently pay their rent on time and in full every month by first carefully vetting your applicants.
When you set your qualifying criteria to ensure that all criteria you set are legal under discrimination laws in your state. Also, always enforce criteria consistently among applicants.
There are many options for online rent collection from Zelle Pay to ACH and a few in between. Online rent collection makes it easier and faster for tenants to pay rent and improves the likelihood for timely rent collection by tenants.
One of the key features you should look for when choosing software to enable you to collect rent online is the ability for your tenants to set up automatic recurring payments. This means tenants can set and forget their rent, dramatically reducing the possibility for late rent payments.
You can now use Landlord Studio to collect rent from our tenants. Simply enable it when setting up the lease, link your tenant and they’ll receive a link. They quickly create an account and can send rent whenever required.
Using our system you can set up automated rent reminders using our fully customizable email templates. These will send a set number of days before and after rent is due to encourage tenants to pay on time.
If you’ve empowered tenants to pay rent online using a software like Landlord Studio these handy reminders are incredibly effective in encouraging timely rent payments.
Late fees are a strategy used by landlords to encourage timely payments and to compensate the landlord for additional admin work and risk created by delayed rent. Usually, a late fee is somewhere between $20 and $50. It’s worth consulting with local and state laws as some states limit the collection of late fees.
When applying a late fee it’s good practice to also have a grace period. The standard grace period is 5 days. This allows for any payments that are delayed in processing, or if they’re paying by check, delayed in the post to come through.
By combining the four items in this article you can dramatically reduce not only late rent payments but also the time and stress that is often involved in chasing up late or missed rent payments.
One thing to note is that you will want to ensure that you abide by state and federal laws when selecting your tenants and setting the parameters of your rent collection process. For example, in some states you need to give tenants multiple options to pay should they be unable to pay by the preferred method.