Rent Collection Tricks
28 December, 2008
(7) Comment
I find that most new real estate investors are too soft on rent collection. Unless you have training or experience in collecting debt, this is not a natural process for you. Many people don’t like confrontation and rent collection is about putting someone (the tenant) on the spot.
Here are a couple quick tips when you are “dialing for dollars” to make it easier to collect rent:
- Be consistent about calling immediately upon the rent being late. If the tenants sense that you are not concerned about the rent, they won’t be either.
- If you can’t get them on the phone, drive over there. There is nothing more important to you and intimidating to them to have the landlord standing at the door at 8pm at night.
- Impose the late fee every time.
- Mail statements to everyone that owes anything over $5. Make sure to get them in the mail or hand delivered immediately upon the rent being late.
- If you get a partial rent payment, immediately call and find out when the rest of the rent is going to be paid. Send another statement with the updated balance.
- When you are talking to the tenant about paying the balance or when they are going to pay, push a little to pay more or sooner. Most people (the tenant) will give in to authority when asked.
- If the tenant does not live up to their commitment, start eviction immediately. It is better to evict early than let it drag on and having them owe you more money. Most tenants can not recover from being a full month behind.
- If your tenants tells you they are paying you next Friday, call them a day or two before and remind them that you are expecting rent and how much your are expecting. Again, if they believe you won’t call or check in, they may/will blow you off.
We own investment properties not because we have nothing better to do, but to make a profit (either short or long term). Rent collection is the key to being a successful landlord. You need this rent/income to keep your business solvent.
Get help buying and owning investment properties from someone who has been there/done that.
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Landlord Ideas
Great list! One thing to watch out for. If you have multiple tenants sharing a unit send the invoice to all tenants. I allowed one tenant to consoliate the rent and speak for the others and later found she was collecting on time but paying late. As soon as all tenants received individual invoices the rent started coming in on time.
Thanks for the post Scott. Sounds like boiler room advice can go a long ways. ABC….always be closing, right!
great post scott! i agree 100%! it is crucial to be firm when collecting rents!
The last sentence says it all: You’re not in this to play house. This is a business, and even if you’re not making a monthly cash flow from rent, you’re still gaining long term equity, and it’s important to make your tenants know this fact.
Great post Scott! These are great tips.
I agree – if you give an inch, they take a mile! We have found that communicating the expectations clearly upfront helps alot. Also, background checks are a MUST. If a tenant has had issues paying rent in the past, they will mostly likely have issues now too!
I found [spam website omitted by admin] is for reporting deadbeat renters. All rental property owners need to checkout that website and post their deadbeat renters. When renters find out their name is on that database they quickly want to pay-up. Also, it helps other landlords from getting burned and you can check if any renter has a record.