Non-landlords often assume that landlords have it easy: they collect rent every month then enjoy the unlimited income. If you think about it, the concept of rent collection is simple: get money from tenants in exchange for their stay in a property. However, in reality, it could get very stressful.

First of all, collecting rent is just one task for a landlord, but it is crucial to the survival of his business. If there is a problem with rent collection, everything else could fall apart.

Late rents can create a cash flow gap that could put a landlord in a problematic situation. Rental income often goes to paying a mortgage, repair fees, insurance, and other operational expenses. The landlord would have to pay those with his own money. If not, repair and maintenance of the property could be affected, which could cause inconvenience to other tenants.

To ensure the survival of their investment property, landlords must prevent problems in the rent collection process, especially late rental payments. There are several ways to do that.

Be clear from the get-go

Expressing the importance of timely rental payments must be done before a lease is even signed. As a rental agent, you should take the initiative to inform potential tenants that they are responsible for consistently paying the monthly rent on time. Doing so would instill good habits vital in maintaining a peaceful landlord-tenant relationship.

Communicating a firm insistence on punctual payment would keep a future tenant accountable to pay rent on the due date, without expecting that a few days of delayed payment is not a big deal.

When you publish a listing on Padleads and syndicate it to other websites, feel free to express the non-tolerance for late payments on the listing. That will deter irresponsible tenants from applying. It is also good to reiterate the rule to potential tenants during the interview and screening process.

Late Fees

Imposing penalties for late rent is a reasonable way to discourage tenants from defaulting on rent. The limit for late fees landlords can charge varies for every state and province. The common practice in Canada is to charge a fee for each day that the rent remains unpaid.

Reward early payments

It is also good to offer rewards, not just impose penalties. Giving an early rent discount as an incentive to tenants would encourage them to pay their rent ahead of time. A small discount that ranges from $10-$50 could be enough to motivate them.

Send reminders

One of the most common excuses tenants give when they default on payment is that they have forgotten the due date. Avoid this by regularly sending them email reminders a few days before the due date.

Convenient Payment System

There is a high demand for online payment options these days. Most tenants find it more convenient because they can send the payment without leaving the comfort of their home and with just a few clicks on their smartphones. The rent collection process would also be easier for the landlord.

Clear lease agreement

Leasing agreements between landlords and their tenants must be well-constructed and should not be based on a random template one finds online. It should specify the rules clearly, including the rent policy.

The rent policy clause in a leasing agreement must include how much the rental fee is, when it is due, how it should be collected and paid, and the consequences for delayed payment.

Since the leasing contract is a legal document and will be used as a legal basis in case of tenant lawsuits, it’s best to consult it with a lawyer to avoid loopholes when it comes to the wording.