Timely rental payments are critical to your cashflow. But getting tenants to make payments on time is a common problem.
But what can you do about it?
Before giving your tardy tenants the boot, read the following tips to make sure your next action doesn’t get you in hot water.
Get It In Writing
Misunderstandings happen. Make sure that the terms of the tenant’s lease are clearly stated in writing, including consequences for late payment. All adults living at the property should initial and sign that they have read and understand the terms.
Stay in Touch
Your first step is to communicate with your tenant and find out what the issue is. Even if it is the first time a payment is missed, picking up the phone and talking to someone makes it clear that you’ve noticed they didn’t pay as agreed. Be sure to reiterate the due date and consequences for late payment. Sometimes this is enough to keep your tenant from developing bad habits.
Other times a tenant may not be paying rent because of maintenance issues. Find out the problem, and refer them back to the lease for issues they’re responsible for.
Send a Late Payment Notice
If you count on rent payments to cover monthly expenses like a mortgage, you’ll be fined when paying late. It’s good business to pass these fees along to your tenants to discourage a regular habit of paying after the due date.
Start with sending a late rent notice that reminds them of the consequences of late payments.
Check with your local jurisdiction to find out the maximum late fees allowed by local law.
Prepare for a Legal Battle
If your tenant consistently pays late or doesn’t pay at all, you may need to start the eviction process. Be prepared for a long and lengthy process that will cost a substantial amount of money. You’ll want to consult with a legal professional to make sure all notices are properly delivered and at the correct time.
Good communication is the foundation of any successful landlord-tenant relationship. Don’t start to evict someone for missing one payment, but be clear about the consequences of late payments or not paying at all.
If you want to avoid the hassle of eviction, stay in touch with your tenants and work with them if they inform you of a financial hardship. While it may put a strain on your cashflow, it’s a lot less expensive than evicting them and preparing the property for a new tenant.