Becoming a landlord is a dream come true for many Americans. It’s a means of investing in the future and creating a business that can generate cash flow for a lifetime. However, that flow of cash can get crimped very quickly if tenant’s rental payments are consistently late.
The following tips can help to make tenants turn in rental payments on time:
1. Use Tenant Screening
Past behavior is the best predictor of future actions, and screening tenants can help to determine if an applicant has a good track record of making rental payments on time. Past evictions or a poor credit rating due to late or missed payments are definitely red flags, and these applicants should be avoided.
2. Late Fees
Another highly effective measure for motivating renters to make payments on time is by enacting and enforcing a late fee policy. Again, enforcement is key; being lenient will only send a message that it’s fine to pay rent late, and the tenant will not take deadlines or other policies seriously. Landlords should check the laws and limits for rental late fees in their state.
3. Automatic Payments
Having tenants sign on with an automatic electronic payment system can ensure the rent money will be withdrawn from their account on the first of the month. While it is still the tenant’s responsibility to have the funds in the account at this time, the knowledge of the automatic withdrawal will serve as a motivator for them to be ready with the rent payment on the first of the month.
4. Incentives For Early Tenant Rental Payments
Consider offering a small discount or prize for tenants who pay their rent at least three days ahead of time. This will act as a positive incentive for early payment, and even if they don’t achieve it every month, on-time payment will be more likely going forward.
Owning and renting out property can have its ups and downs, but being paid on time is primary in each landlord’s business goals. Without the cash flow of on-time rental payments, it can be very challenging to succeed. From tenant screening to cash incentives, landlords can make use of these four tips to avoid problem tenants who don’t pay their rent and help ensure the rent is paid on time consistently.