If you’re in the business of rental properties, you’re likely well aware of its advantages and challenges.
The property management industry can be lucrative, and demand is healthy. As of 2016, 35 percent of U.S. residents were living in rental housing, and a Forbes article points to 6 to 8 percent growth in rental prices over the past several years.
At the same time, late rent payments can be a serious problem for property managers. In fact, a recent study found 35 percent of Americans with credit records have been reported to credit agencies for nonpayment of rent, credit card charges, medical fees or other debts.
Fortunately, property managers can take several steps to reduce their chances of chronically late rent payments. Before tenants move in, preventatives might include the following:
- Scrupulous Screening - Complete due diligence by setting income standards, running credit checks, checking prior landlord references, confirming employment, etc.
- Preemptive Rent Payment Due Dates - Anticipate tenant issues ahead of time and set the rent payment deadline for a week or more before you really need the money to meet your own financial obligations.
- Automatic Tenant Reminder Systems - Tools like Alert Solutions allow you to automatically send tenants reminders via text, email and/or phone, letting them know their rent payment date is coming up or has already passed. That helps ensure good tenant communication and saves you from many of the necessary awkward conversations when rent payments are late.
- Electronic Rent Payments - In this digital age, many tenants find it much easier to simply send their rent online rather than writing a check, finding an envelope and stamp and locating a mailbox. Seek out an efficient property management software that can process online payments while taking care of many other administrative tasks.
Once tenants move in, landlords might consider:
- Ongoing Tenant Communication with the Chronically Late - If you notice consistently late rent payments from certain tenants, reach out to them, listen to their reasons and consider solutions. Some tenants may need slightly different payment schedules according to when they’re paid, when they receive child support, etc.
- Enforced Late Rent Payment Fees - Chances are your lease agreements stipulate when and how late rent payment fees will be enforced, but you haven’t always enforced them. If tenants are starting to take advantage of that leniency by surpassing deadlines — sometimes it’s human nature to disregard a rule that’s never enforced — you may need to be stricter about adding such fees. Just be sure you enforce the rules fairly and consistently among all tenants.
Late rent payments can put a serious dent in your ability to turn a profit on your rental properties. Call Alert Solutions at 800-929-1643 to learn more about how our tenant communication system can help keep tenants informed.