If you’ve considered expanding your investments by getting into rental properties, you might be excited about building a steady income stream by collecting rent each month. It can be a great way to make money and serve as a hedge against inflation, especially in a market like Charlotte, where more than 40 percent of households are renters.
But unlike a regular job, you can be left with empty pockets if you don’t have a good strategy for dealing with rent collection. Getting that money on time is necessary so you can cover your own expenses and mortgage payments.
Let’s take a look at the rent collection process and how to manage it.
Within the pages of your lease should be detailed information about your rent collection policy. Spelling it all out there means your tenants agree to all the terms before they move in, and you have a clear guide on how to deal with them when it comes time to collect their rent.
Everything should be included in the lease agreement, your policy should cover at least the following:
- Partial payments
- Where to pay
- How to pay
- Due date and grace period
- Late payment fees and other fees
Follow your policy carefully as it protects you under landlord-tenant laws and ensure that it complies with North Carolina laws on late fees and other rent rules.
This is one of those critical landlord tips that can slide when you start making exceptions for some renters and not others.
If paying rent is quick and simple, the odds of your tenants getting their payments in on time increase. Add the option for them to pay you via auto payments through ACH, direct deposit, or online bill pay, and you’ll get your money dependably and quickly.
Flexible payment schedules are becoming more common as well since bi-monthly payments might fit better with a tenant’s income flow. You can also offer incentives to get renters to sign up for auto-payment or pay early.
Good communication starts when your tenants sign their lease and you go over the rental terms and collection policy. You can stay in touch with them through automated messages that remind them about rent being due and when the grace period is about to end.
No matter how wonderful your tenants are, there’s always the chance that they’ll end up behind on rent. If you find they’re becoming evasive, it’s time to enact the consequences outlined in the lease.
When you can, it’s better to have good communication and try to work out a late rent situation. Eviction takes time and money and keeps you from getting a new — and paying — renter into your place.
Want To Outsource Rent Collection?
Rent collection can be the best and worst part of a landlord’s job. Having a good policy in place and making paying rent as easy as possible for your tenants can help cut down on the potential headaches. Follow your policy, document everything, and keep lines of communication open with your renters.
If you’re finding rent collection a struggle, contact us to learn more about how we can help you as part of our property management services.