How to Collect Rent from Your Tenants

Collecting rent is one of the most important tasks of a landlord. The rent should be collected on time, it is a fairly easy job if handled properly. The best plan will be when you discuss the lease terms to go over the amounts of rent and the date the rent is due. Be sure to focus on the importance of paying the rent on time and late payment charges.

Basic Ground Rules

  • How much is the rent?
  • When is it due, is it weekly or monthly?
  • What is included? For example, utilities, gardener, etc.
  • If payment is by check, what is the name and address of the landlord?
  • What if the check bounces?
  • What is the due date, and grace period, for payment?
  • What are the penalties if the payment is not received on time?

Provide the tenant with clear instructions so that it will be easy on both you and the tenant.  You can also call to remind them or email your tenant a few days before due date to be sure the payments are received on time. Remember, it is better to keep all the communications in writing, in case any legal action becomes necessary.

Rent collection modes:

Generally there are three modes of payment:

  • Cash delivery, to an authorized representative, like a manager.
  • Checks by mail – either can be mailed or dropped at a collection center.
  • Online payment – either by credit card at your website or through other online rent management program, or agencies like PayPal.
  • Employing a third person like a property manager will be better because it will help to have as little personal interaction as possible.

Late Payments

You should write a letter to the tenant as quickly as possible when a payment is late. Write the letter the very next day to remind them about non-payment. Be sure to include information about the penalty, which may be 5% to 15% of the rent. Start sending notices consecutively with proof of delivery. Make sure that there are no arguments, verbal fights or threats etc. Be cool and professional and do not get personal about the late payment.

Legal Action:

Be sure that you learn about local state’s laws and learn the procedure that surrounds them. You need to know about the eviction process. A tenant and landlord should try to amicably come to a resolution as much as possible, and avoiding the legal process is the less costly and usually the best approach. There are a few other things you should do to be sure you are covered in the case of a legal matter.

  • Keep meticulous records.
  • Provide self-addressed envelopes for mailing checks.
  • Be firm about on-time payment.
  • Be firm about effecting penalty right from the first time.
  • All communication must be in written form.

Understand what the essential requirements are and go ahead with collecting the rent. Again, remember that collecting rent is easy only when you understand the essential parameters involved and carry it well with all the professionalism required.

Can you collect rent on a property in foreclosure?

You still have the right to collect rent even if the house is in foreclosure. The lease agreement is still in effect and is not affected by the foreclosure. Once the home is foreclosed upon, the lease will be terminated. While it is still legally acceptable to continue collecting rent on the property, that does not mean that you will be able to. Once the tenant finds out that the house is in foreclosure, there is a good chance that she will no longer pay the rent. She will also most likely start looking for another place to live.

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