The Business of Collecting the Rent
The Business of Collecting the Rent
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Home Page > Finance > Real Estate > The Business of Collecting the Rent
The Business of Collecting the Rent
Posted: Dec 10, 2007 |Comments: 0
| Views: 327 |
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If you own rental income property, rent should pay the mortgage and the expenses of that property, even if you lease a single-family house. If you are an investor, a monthly positive cash flow is critical to owing investment property. Therefore, collecting the rent is a major part of your property’s success.
Collecting rent is a business, because it is what pays for your mortgage and the long-term maintenance of your building. It should be your priority. You may believe that you have your current collection efforts under control. Still, as long as you rent apartments, at some point in time, you will have a rent collection problem.
Today, there are strong state laws that govern, restrict, and outline how, why, and when you can collect your rent. For example, many rent control laws dictate how much rent you can charge, and the methods by which you can collect your rent. Evictions for non-payment of rent can be avoided if an owner develops and follows a few basic policies and procedures. The more consistent you are in maintaining your policies, the better your rent collections will be paid monthly and on time.
My advice is to review your expectations about how and when the rent is paid before you give your tenant the keys. Even if you use a lease, there is no substitute for an eye-to-eye discussion about how you want your property to be treated, and when the rent should be paid. It is important to have a meeting of the minds before you commit your apartment to a person or family that may intend to violate your rules.
The first policy is the date when the rent is due. Rent is usually due on the first day of each month, and is considered late on the second. There are landlords who allow a “grace period”. This is a period of time after the first of the month, which allows the tenant to cash his or her pay check and get a check or money order to you within the time frame you determine.
Landlords are not obligated to give a tenant a grace period. It is a courtesy extended to the tenant, not a right. My advice is to allow a grace period of no longer than three days from the first of the month. If the rent has not been paid by then, late charges or a lease termination notice should be processed.
The second tenant policy should state that you want your rent paid by personal check, certified check, or money order. Cash has a way of getting lost, or not recorded as a rent payment. Never take food stamps as rent payments, as this is a federal offense.
Third, make it clear that if your tenant gets behind in the rent, and you must start eviction proceedings, you will continue the case until the rent is paid in full. The tenant will do a better job of getting caught up with the rent if he or she knows that facing a judge could be the penalty.
Last, encourage your tenant to contact you when and if the rent will be late. Establish a good communication practice from the beginning. A landlord sometimes intimidates a tenant. Let the tenant know that you welcome their information; it could become a key element in ensuring prompt rent payments.
Rent collection should be considered the most critical part of being an investor or a homeowner with tenants. This is especially true even if you no longer have a mortgage. If you are not serious about collecting your rent, you give the impression that money is not really that important to you. When you do not insist that the rent be paid on time each month, or even in full, you are in effect, saying that you can get along without the rent.
If you do not articulate your expectations, or accept excuses as to why the rent is not paid every month with no ramifications, you will soon lose control of your rent collection efforts. Collect the rent as if your property is a for-profit business, and you can’t go wrong.
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Carolyn Gibson -
About the Author:
Carolyn Gibson is a Certified Property Manager® and author who specializes in providing consulting, training, and due diligence in all operational facets of residential property management.
She is a member of the Institute of Real Estate Management (IREM®), a Chicago based, international trade organization. She has served IREM® as a Past President of the Boston Metro Chapter #4, a national instructor and Regional Vice-President for the New England area.
Ms. Gibson has more than two decades of senior level residential property management experience. As the former owner of a property management company, Carolyn’s firm managed conventional, city, state, and federal government subsidized and nonprofit housing, low income tax credit housing, public housing, condominiums and rooming houses.
Carolyn’s web site is www.synergyprofessionals.com. She has been interviewed on www.WomensRadio.com, and is a contributing author on www.ezinearticles.com, www.Helium.com, www.articlesbase.com, and www.searchwarp.com.
Her book on tenant screening, titled “How to Pick the Best Tenant”, is available at www.Amazon.com.
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Article Tags:
rent, rent collection, housing, real estate, lease, rentals, landlord, business, property, rental income, grace period, manager, tenant, tenants, eviction, real estate investor, cash, check, money order
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Carolyn Gibson is a Certified Property Manager® and author who specializes in providing consulting, training, and due diligence in all operational facets of residential property management.
She is a member of the Institute of Real Estate Management (IREM®), a Chicago based, international trade organization. She has served IREM® as a Past President of the Boston Metro Chapter #4, a national instructor and Regional Vice-President for the New England area.
Ms. Gibson has more than two decades of senior level residential property management experience. As the former owner of a property management company, Carolyn’s firm managed conventional, city, state, and federal government subsidized and nonprofit housing, low income tax credit housing, public housing, condominiums and rooming houses.
Carolyn’s web site is www.synergyprofessionals.com. She has been interviewed on www.WomensRadio.com, and is a contributing author on www.ezinearticles.com, www.Helium.com, www.articlesbase.com, and www.searchwarp.com.
Her book on tenant screening, titled “How to Pick the Best Tenant”, is available at www.Amazon.com.
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