Tips for Landlords: How to Collect Late Rent
One of the most difficult challenges for a landlord is dealing with late rent payments. You don’t want to overreact and begin serving threatening legal rent-demand notices because doing so creates tension and hostility if the resident has a legitimate reason for the delay. Then again, late rent can be a very serious issue.
Communication is the key to keeping your response appropriate to the magnitude of the problem. Remain calm and businesslike, and focus on determining why the rent is late before taking any action. If you’re having trouble collecting rent on time, consider these options:
Email or mail your residents monthly payment reminders or invoices. Although electronic payments are the best approach, some owners find that a rent coupon book (just like a mortgage payment coupon book) can be helpful in improving their rental collections.
Call slow rent payers routinely. Landlords and property managers seeking payment of delinquent rent aren’t subject to the regulations set by the Fair Debt Collection Practices Act. You can call residents at home and at their places of business. (Don’t feel bad calling their work as long as you’re respectful and professional.) Remind these slow payers that the rent is due on or before the first of the month.
Go to the rental unit and speak directly with residents. Don’t be shy, or else paying the rent will quickly become a low priority for your residents. But remember to document your visit with a written notice to the resident. You may need to show it to a judge at some point in the collection process.
The most effective way to collect rents and determine whether you should exercise patience is to contact your residents directly. Simply mailing a rent reminder or hanging a late notice on the front door can be effective with residents who just need a reminder, but these tactics typically don’t get the job done with residents who are financially strapped and likely to respond only to direct personal contact.
When contacting residents, your goal isn’t to harass them but to remind them about rent payments. Be solution-oriented and work out an agreement to get your rent. Whatever agreement you reach, make sure that it’s in writing and that the residents sign it.
If you’re having trouble locating a resident, check with her neighbors or call the emergency contact listed on her rental application. Check to see whether the utility company has been told to cancel the utilities; maybe the resident has skipped town without notifying you.
Be firm in your rent collections. The most common mistake landlords and managers make is breaking their own rent collection rules. They allow rents to be paid late, accept excuses, fail to send timely collection or legal notices, and find themselves housing residents who are weeks — even months — behind in rent payments. Keep in mind that you’re running a business.