Purchasing a rental property can be risky, especially if you self-manage the property as an independent landlord. Collecting rent from your tenants in Columbia, Maryland, 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? We have a few time-tested ways to collect your rent from these tenants and prevent it from happening in the future.
Ask What’s Going On
Sometimes all you have to do is ask your Columbia tenants what’s going on. If you haven’t received rent on time for the last couple of months, simply ask what’s wrong.
Having an open line of communication between you and your tenants is essential for a good business relationship. Keeping communication open means being available to your tenants when they need something or have a question.
When you have a good relationship, you can easily have a conversation about why they keep paying their rent late. From this conversation, you may be able to figure out a solution or have a little more understanding of their situation.
Remember, this initial conversation shouldn’t be hostile. It should be calm and just a friendly chat. Ask how you can help them while still being clear that they do need to pay their rent.
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 past the due date, a late fee will be owed. This could be as little as $50 after five days or as much as $150 after seven days. Check local laws to see if there are any limits to this before writing it in the lease agreement.
This late fee can be a deterrent to tenants who think it’s ok to pay rent late on a regular basis. It will also show your late-paying tenants that you stick to your policies when you do charge them the fee. Next month, they are more likely to pay rent on time.
Send a Late Notice
If you have tried to contact your tenants in Columbia for their rent due and owing and have not gotten a hold of them, it’s time to send an official notice. This notice should be written and 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 takes place.
- Date of the notice
- Tenant name(s)
- Total amount due including any late fees
- The date that rent was due
- Payment methods
- Further action if rent is not paid
- Landlord’s signature
There are templates online you can use, or you can draft a quick notice. Just make sure it includes all of the information listed above.
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 a number of ways tenants in Columbia 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 in Columbia 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 possibly 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 Property Management Company
The best way to deal with late-paying tenants is not to deal with them at all. Yes, you read that correctly!
You can own your rental property without ever having to meet the tenants that live in it while still making a profit.
When you hire a property management company, they take care of everything for you – including collecting rent. So, when your tenants are paying late, it isn’t you chasing them down. It’s your property management company who does that for you.
With professional resources and experienced team members, a good property management company can also ensure that tenants pay rent on time every month. Through a thorough tenant screening process, you can avoid having bad tenants altogether.
Plus, if you ever need to pursue an eviction, your professional property management team will handle it for you. You don’t have to worry about preparing documents and dealing with an angry tenant.
All you have to do is sit back and enjoy the many benefits and passive income from your rental property investment.
Are You Looking for a Property Management Company in Columbia?
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 Columbia and state-of-the-art management systems, you’ll know your property is in good hands.
Contact us to see what we can do for you and your rental properties today!