FUNDAMENTALS
RENTALS
3 Steps to Improve Rent Collection
DECREASE LATE PAYMENTS WITH THESE SIMPLE STEPS
by Ben Luxon
“…late rent payments rose over 4% between November 2020 and February 2021” —LANDLORD STUDIO DATA
it becomes to keep track of who has and hasn’t paid. Because of this, landlords need processes in place to efficiently keep track of the rent that has and hasn’t been paid. To reduce the potential for late rent, these processes should include steps to help remove any poten- tial barriers for tenants, as well as systems to automatically chase those tenants that, for one reason or another, are late. For example, if you’re going to col- lect rent via check, make sure you’ve clearly stipulated where and when the rent checks need to be sent. If you’re going to collect rent online you need a clear and easy way for tenants to complete their payments, and a process in place to help them get set up. NO. 2 EFFICIENT TENANT COMMUNICATION Once you’ve got your processes established, you need to communi- cate them to your tenants. Your lease needs to clearly state not only the rent amount, due date and frequen- cy, but also how you expect rent to be paid, your late fee and grace
period policies, and what happens should rent not be paid. Additional- ly, we recommend reiterating these points clearly in a welcome email or letter. If you are in any way uncertain if your tenant has a clear understand- ing of the rent payment process, it could be worth checking with them in person. Finally, you can use software to automate some of these communi- cations. For example, with Landlord Studio you could create a welcome email template to quickly send to each new tenant. Also, you can set up automated rent reminder emails or invoices. These friendly remind- ers will increase the likelihood that tenants remember to pay and thus result in more timely rent payments. NO. 3 COLLECT RENT ONLINE While numerous people still col- lect rent via cash or check, this is an outdated, insecure, and inefficient method. Many tenants simply don’t have cash on hand, and if they are mailing the money to you it could get lost in the post, it’s also not trace- able meaning there is no proof of
H
aving an efficient rent collection processes will not only help
reduce the stress that is often the case for both landlords and proper- ty managers at rent time, but it can help reduce the likelihood of late and missed rent payments. This is especially important now with clear trends suggesting that an increasing number of tenants are falling into rent arrears. In fact, according to aggregated data col- lected by Landlord Studio of over 12,000 active leases across the US, late rent payments rose over four percent between November 2020 and February 2021. And as late and missed rent is the leading cause of evictions in the US it’s unsurprising that vacancies were also up two per- cent over this period despite eviction moratoriums being in place. Here are three tips to simplify and improve rent collection processes. NO. 1 HAVE A PROCESS IN PLACE Collecting rent can, at times, be tedious. You shouldn’t have to chase tenants each month, yet sometimes you do. And the more units you’re managing the more of a challenge
54 | think realty magazine :: may 2021
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