If there's one thing that we learned from the COVID-19 pandemic, it's that times of crisis can lead to a significant drop in on-time rent payments. In fact, some Texas landlords may still be recovering from that loss in revenue today.
If you've been lax about rent collection, it's time to get more proactive. By making a few small changes, you can secure rent payments and avoid another major loss in revenue.
Hiring a property management team is one of the best choices you can make to protect rent collection. However, this is just the first step.
Read on for tips to maximize your protection for rent collection.
Screen Rental Applicants
When it comes to collecting rent payments, you're going to want to be proactive before your tenants even sign the lease. We're talking about screening rental applicants to verify some key information.
Tenant screening should go beyond checking a tenant's credit score. During a credit check, you can also access key information like payment history and an applicant's debt-income ratio. This last one is important because even if a tenant has good credit, they may struggle to make rent if too much of their income goes to paying down debt.
Create a Clear Lease
The next step is to revisit your lease and make sure that the expectations are clear. This includes a complete breakdown of the money owed, including parking and utility fees if relevant. You should also list viable payment options (e.g., cash, checks, or online payments) as well as the date by which rent is considered late.
Then, create a policy to reinforce on-time payments. It's not a bad idea to include a grace period, giving tenants up to five days after rent is due to pay it without incurring a late fee. However, a late fee needs to kick in at some point, and you need to make it clear how much that late fee is.
Provide Options That Make Rent Payment Easier
Even the most financially savvy tenants can fall on hard times. Rather than scrambling to find a solution when it arises, come up with a plan that you can use if someone can't make rent on time.
One option is to allow them to use a portion of their security deposit to pay one month's rent. Another is to lower rent for a month and redistribute the balance over the coming months, giving them time to recover their finances. Not only can this kind of assistance protect your rental collection, but it can also improve your relationship with your tenants.
Need Help Boosting Rent Collection?
The pandemic showed landlords across the nation that moments of crisis can have long-lasting effects on rent collection. These methods can help to protect your income from rental properties while also making it easier for tenants to navigate their financial ups and downs.
Looking for a property management company that can take care of rent collection and more? Contact us today.