Explain your rent collection policy to all new residents before they move in. Have this policy in writing and stress the seriousness of prompt payment. Remind new residents that late payments may affect their credit rating. Have the new resident circle and initial the lease section that says rent due on the 1st.
Because many owners offer grace periods, residents may think rent is due on the 5th. Consider, if your state permits, not providing a grace period. “Rent is due on the 1st with a $XX late charge on the 2nd.”
Sounds tough, but it works! But you must enforce late charges. Threatening late charges, but never enforcing them only causes more delinquency. The residents will see you as all “bark” and no “bite.”
If you clearly communicate the rent collection policy before move-in and reinforce your conversation by giving new residents the policy in writing, they will believe and expect you to enforce the policy.
Move quickly on delinquencies
All residents who have not paid by the 1st must be sent notification on the 2nd. If the resident says, “It’s in the mail,” ask for a substitute check and return the mailed check when it arrives. Again, the key is acting immediately. Demonstrate an expectation to every resident that you know they will pay rent on time.
When a resident is late, be understanding. But make it clear to the resident: “We want the rent, and we want it now.” Do not accept excuses nor negotiate with the resident to catch up next Friday.
One possible option for stimulating payment of rent is the “emergency contact.” Hopefully, your rental application gives you permission to contact all “emergency” references in case of non-payment. If so, notify the resident’s emergency contact if rent is not paid on time.
Yes, our residents sometimes have legitimate financial problems. Job lay offs, car troubles, or medical emergencies can really put some of your great residents in a financial bind. Yet, your obligation to your family is to collect ALL the rent remains.
The ethical thing for you to do is aggressively go after full payment and late charges. Your response to the delinquent resident should be, “Sorry you were laid off from your job, but your rent is due now. Let me suggest the following options…”
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Ask for a loan from family or friends
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Use a credit card for a cash advance
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Take money out of savings or retirement fund
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Contact your church or some other agency to see if you can get help
If a residents pays, but pays a couple of days late, remind the resident of the actual due date and asses appropriate charges if they were not included. Say something like, “We really appreciate your rent, but since it was paid after the due date, the following amount is now immediately due to avoid eviction proceedings. Thank you!”
Be aware of all residents who are delinquent. Do not harass or embarrass the delinquent resident, but be firm with your policies. Do not entertain options that do not include the resident paying the rent ASAP. If you negotiate and let the resident off easy, the real loser is you!
And never use the eviction as an empty threat or a mere collection strategy. When you start to evict, follow through with the process.
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