Top Tips in Handling Late Payments - Our Guide
There are many aspects of property management to consider. From marketing your rental units, screening for potential tenants, maintaining your properties, to addressing tenant issues and concerns, it can all prove to be an overwhelming process.
One of the most challenging parts of managing properties is in collecting rent payments. No matter how meticulous you were in the selection process of tenants, they may face certain circumstances that will leave them unable to pay for the rent. When faced with such a situation, how do you proceed?
In such situations, it’s best to hire a property manager to handle the different aspects of management, including collecting rent payments. In this article, we will share with you top tips on how you or your property manager can handle late payments:
1. Considering late rent payment
Now, the question is when do you consider a rent payment late? First, it usually depends on what you and your tenants have agreed at the beginning of the contract. Make sure to have a contract drafted and have this signed by your tenants so that they know your payment policies. In most cases, the rent will be paid every month, usually at the first of the month. You may have a five-day or ten-day grace period before you consider a late payment. This condition should clearly be indicated on your monthly rent bill.
2. Charging a late fee
In most cases, a late fee is charged once the tenant has gone past the grace period. You should include this on the contract so that you would encourage tenants to pay on time. Without this, your tenants won’t get committed to paying on time. For the most part, a late fee is typically ten percent of the monthly rent, or you can have a flat rate, as long as your tenants have agreed to it on the contract. Make sure that all your tenants are well-aware of the late charge policy.
3. Accepting partial payments
As with any financial situation, it’s best that you accept partial payments because it is actually better than having no payments at all. You can have your tenants pay the rent in installments throughout the month, especially if they’re struggling to get through the month. At times, you and your tenants would have to negotiate and make payment arrangements. While you give considerations, you have to be firm with your decisions, and make sure that your tenants understand the repercussions of not paying on time.
4. Evicting for non-payments at all
Evicting a tenant from the property due to non-payment is the hardest part. However, make sure that you set proper guidelines and that they are all stipulated on the contract as well. For instance, you can allow your tenants to stay for a month or so before they will be evicted. Make sure to provide proper warnings in writing for transparency and legal purposes. Check the state eviction laws before issuing the notice so that you’ll ways comply with the law.
At this point, you now know how to deal with negligent tenants and handle late payments. As a landlord, it’s best to hire a property manager to handle the most challenging aspect of property management – collecting rent payments. You can expect your property manager to handle the situation with patience, kindness, and legal compliance all rolled into one.
If you’re looking for a property management company in Brooklyn, get in touch with us today to see how we can help!