One thing about passive income: it’s not always passive. When mortgages rear their ugly head, and the rental payment is “mysteriously” absent, your blood pressure rises and your bank account plummets. As a landlord, you need to act fast when something falls out of place, but it’s not always easy since so many of us are landlords “on the side.”
When you work full time, how can you find more time to follow up with stubborn tenants? Well, you shouldn’t have to so long as you followed proper tenant screening protocol like we talk about here, but many simply don’t know about tenant screening. So what do they do? Better put, what do you do after you ignore proper protocol?
Collecting a rental payment doesn’t have to feel like taking a pound of flesh from your tenant like Shylock. In fact, we here at TenantEvaluation put together this nifty list of tips and tricks to make collecting easy, just like we did for tenant screening. Take a look:
Truly, the only promising way of collecting rent on time, every time, is to require tenants to pay rent online through some automatic deduction system. Many of these systems will actually make a direct deposit straight into your checking or savings account.
The best part is these systems totally eliminate human error from the equation. Never again will paying rent “slip your tenant’s mind.”
It only makes sense that responsible tenants will responsibly pay rent on time, online or otherwise. As they say, history repeats itself, and that’s why tenant screening is so important.
With proper tenant screening comes a detailed understanding of rental history, credit history, and criminal history. TenantEvaluation provides all of the above in comprehensive reports the moment a tenant fills out their online application. Learn their credit score and credit history. See if they’ve had an eviction. In fact, if a tenant has had an eviction, they are three times more likely to be evicted again.
While such things should not always immediately disqualify a tenant, it does literally pay to keep these things in mind. To learn how to fully read and evaluate a comprehensive rental application report, check out our article, “Tenant Background Checks: Credit Scores and Beyond.”
This all said, far and away the most important aspect to receiving your rental payment on time, is to follow your own rent collection policy. Enforce it.
If you allow your tenants the leeway to produce rental payment on time or not on time, they are going to pay late every time. Being consistent is the only way to establish precedent. In this vein, you need to compose the policy and articulate it in your lease agreement beforetenants move in. Some additional fiscal policies to address are:
-The exact payment amount
-How to make payments
-Rent due date
-Grace period policy
-what happens if checks bounce
This is the fun part. A creative way to inspire consistent rental payment is to offer rewards. You hear about employee retention all the time, but nearly never hear about tenant retention.
Just like managing employees, offering incentives and rewards inspire mutual satisfaction and seamless productivity. It doesn’t have to be something over the top. Maybe look into an edible arrangement or chocolates.
Not to mention, time your gifts. Time it right when their lease is ending. Sometimes, by offering a tenant who is considering leaving with a reward at the right time, you will coerce them to stay and resign. Retain good tenants and you won’t have to worry about evicting the bad ones.
For more information about landlording on the side, check out our blog for free invaluable information. Get what you need to succeed.