Purchasing a rental property can be risky, especially if you self-manage the property as an independent landlord. Collecting rent from your tenants in Montgomery County is crucial to making your real estate investment profitable.
Unfortunately, some tenants may not always pay their rent on time. For landlords, this can be distressing and problematic. When you don’t get rent from your tenants, you don’t get income from your investment property.
So, how do you deal with late-paying tenants while staying compliant with strict Maryland landlord-tenant laws? We have a few time-tested ways to collect your rent from these tenants and prevent the issue from happening in the future.
Enforce Late Fees
Nobody likes spending money on something they don’t have to. A good tactic to prevent most tenants from habitually paying the rent late every month is to enforce a late payment fee.
In the lease agreement, write a clause stating that after a certain number of days have passed, the due date, a late fee will be owed. Crucially, Maryland law places a strict limit on late fees: the fee cannot exceed 5% of the total monthly rent.
This late fee can be a powerful deterrent. By sticking to this Montgomery County policy, you show your tenants you operate professionally, making them more likely to prioritize timely rent next month.
Send a Formal Notice
If you have tried to contact your Montgomery County tenants for their rent due and owing and have not gotten a hold of them, it’s time to send an official notice. In Maryland, this is often the required first step before proceeding to court. This notice should be written and clearly communicated (emailed or posted on the property).
There are a few crucial details you must include for the notice to hold up in court if an eviction becomes necessary:
- Date of the notice
- Tenant name(s)
- Total amount due, including any late fees (must adhere to the 5% MD limit)
- The date that the rent was due
- Payment methods
- Further action if the rent is not paid (referencing the formal eviction process)
- Landlord’s signature
Always consult the Maryland Judiciary’s Landlord-Tenant page to ensure your notice meets all current procedural requirements before filing for failure to pay rent.
Set Up Convenient Payment Methods
While your tenants should absolutely pay their rent on time, no matter what, you, as the landlord, can make it a little easier for them to do so. There are several ways tenants can now pay their rent – some more convenient than others.
Technology has made paying rent super easy. Landlords can now collect rent each month through mobile apps, online tenant portals, and other electronic services. Some of the most popular services are PayPal, Venmo, and CashApp.
You may have to pay a minimal fee to use these electronic services. However, think of it as a convenience fee for both you and your tenants. 57% of renters say that being able to use online payment methods is important to them when paying rent.
Of course, you can always collect rent the old-fashioned way with a check. Your tenants can send it to you through the mail. Or you can set up a drop box at the property. All your tenant has to do is drop their check-in it and you’ll collect it.
The easier it is for your tenants to pay rent, the more likely you will receive it on time. Even if it means going out of your way or sacrificing a small percentage of the payment, it can be worth it in the long run.
Notify the Credit Bureau
Not many landlords are aware that they can notify the Credit Bureau of missed or late rental payments. These late or missed payments could affect your tenant’s credit score.
We do caution landlords when going this route, though. Before notifying the Credit Bureau, give your tenants a warning. Credit scores are extremely easy to ruin and difficult to build back up.
After warning your tenants about notifying the bureau, if they still do not pay, then you may proceed.
Hire a Montgomery County Property Management Company
The best way to deal with late-paying tenants is not to deal with them at all. You can own your rental property without ever having to meet the tenants who live in it while still making a profit.
When you hire a Montgomery County Property Management Company like Mainstay, we take care of everything—including collecting rent and handling disputes. Our professional resources and experienced team members ensure tenants pay rent on time every month.
Plus, if you ever need to pursue a non-payment of rent eviction, your professional property management team will meticulously prepare and handle the court filings (like the Failure to Pay Rent form, necessary to begin the legal process in Maryland). You avoid worrying about complex procedural documents and dealing with an angry tenant.
All you have to do is sit back and enjoy the benefits and passive income from your rental property investment.
Are You Looking for a Property Management Company in Montgomery County, MD?
If you don’t want to deal with late-paying tenants ever again, talk to Mainstay Property Management.
With a full team of dedicated and experienced professional property managers in Montgomery County and state-of-the-art management systems, you’ll know your investment is protected from the financial and legal risks unique to the Maryland rental market.
Contact us to see what we can do for you and your rental properties today!