Data from 2022 showed that 44,470 renters owed money/rent to their landlords.
This is a discouraging statistic, especially for you as a landlord. It's not uncommon for tenants to pay their rent late. While this can be an inconvenience for you, it can also make financial planning challenging.
Your goal is to make money off your investment property and late rent payments make that difficult.
If rent collection has become a stressor for you, keep reading. Our guide will give you a few tips on how to implement late fees and what to do when a tenant isn't paying.
Setting Late Fees
A late fee is a charge your renter will have to pay if they don't pay their rent on time. It acts as a financial incentive for tenants to pay.
They will also help you cover the administrative costs that are associated with late payments.
As a landlord, you can't charge a late fee unless it's included in the lease agreement. You'll also need to research local and federal laws as there are restrictions and limits on what you can charge.
It's also crucial that you charge a reasonable amount to keep your renters happy. Charging an excessive amount will likely lead to dissatisfaction.
It's important that you do local market research as well. Finding out what other landlords in your area are charging as a late fee can be beneficial to your pricing strategy.
Implementing Grace Periods
You should also implement a grace period. A grace period is a specific window of time after the due date, during which tenants can pay their rent without incurring late fees.
If there are banking issues or postal delays, your tenant won't have to worry about paying a large late fee. Providing some flexibility will show your tenants that you understand unforeseen issues arise.
A grace period should be included in the lease agreement and is typically three to five days.
When it comes to all rent collection topics, it's important that you're consistent. Avoid special treatment and expectations.
Contact the Tenant
There's always a chance your tenant will miss the deadline. If this is the case, your next step is to contact the tenant.
You should be respectable and kind when you're messaging or talking to your renters. Often times they may have forgotten or they may be facing a temporary financial issue.
Open and kind communication can lead to solutions instead of conflict surrounding rent payment.
Late Fees and Grace Periods: Navigating Rent Collection
Collecting rent is a crucial aspect of property management. Grace periods, late fees, and clear communication can help eliminate issues associated with rental income. They will help you build a good tenant/landlord relationship.
Be sure to stay informed on local laws and contact a professional with concerns and questions.
Here at PMI of the Midlands, we understand all aspects of rent collection. We know how challenging it can be and we are here to help.
Send us a message today and our team will discuss all your questions.