Collecting rent on time is essential when you’re renting out a Eureka property. Without the consistent and recurring payments from your tenants, you cannot earn money on your investment.
As
professional property managers, we’ve found that the best way to keep rent collection easy is with a clear rent collection policy. More important than having that policy is enforcing it.
Looking for tips on how to avoid late and missing payments?
Here’s how to make rent collection a breeze.
Set your expectations early with tenants. Before they move in, discuss the
lease agreement in detail and make sure they understand their responsibilities during the tenancy. One of the most essential parts of your lease agreement is the rent collection policy. Your written rent collection policy should include:
Before signing the lease, ask your tenants if they have any questions about the rent collection policy.
Enforcement is following through on late fees and filings. While there is no limit on how much you can charge in a late fee, California law requires that the late fee be “reasonable.” We don’t recommend that you charge a late fee that’s more than 10 percent of the overdue rent.
If rent is late, contact the tenant. Remind them of the rent collection policy in the lease agreement, and ask them when you can expect rent to be paid in full, inclusive of the late fee. If necessary, file a Pay or Quit notice and take the necessary steps towards eviction. This should always be a last resort; evicting a tenant in California is time-consuming and expensive. It should be listed as a potential consequence, however, when you’re establishing a rent collection policy in your lease agreement.
Online rental payments are a breeze for owners and tenants.
When you work with a Eureka
property management company, you can expect an online software system that easily accepts rent payments electronically, provides immediate receipts, and even allows tenants to save their payment methods and set reminders or schedule automatic withdrawals from bank accounts.
It makes the rent collection process easy and automatic.
If you’re managing on your own, you may not have access to complex property management software. However, you can still collect rental payments from your tenants electronically. You’ll find that they appreciate the convenience. Not only do online payments lower the risk of late payments, they also serve your tenant retention plans by keeping tenants satisfied with where they live.
Use a payment app to collect rent, set up automatic transfers with your tenant, or download a simple payment platform that will facilitate the seamless collection of rental payments.
Remember that most tenants are tech-friendly, but not all of your tenants will want to pay online or electronically. Be flexible. Accept checks or money orders. Allowing tenants to pay in a variety of ways will also help keep your rent collection practices simple and accessible.
It’s easy to say thank you, but not a lot of
rental property owners think to do it.
Show appreciation for tenants who pay rent on time consistently. Always thank them for their rental payments. Consider a small gift when rent is paid on time for six or eight consistent months. You can offer them a gift card to a local coffee shop, for example. This reinforces the importance of on-time rental payments and it also shows them that you’re grateful they respect the lease agreement. This will contribute to better tenant retention. It will
improve your relationship with tenants and show them that customer service is a priority for you.
Documenting how and when your rent is collected is an important part of rental property accounting. You’ll need careful records to validate your numbers at tax time and to ensure you’re able to see what you’re earning and spending on your investment properties. If you need to file an eviction against a tenant for nonpayment of rent, you’ll need accurate records that reflect when rent was unpaid.
There’s no one way to set up an accounting system.
Property managers use online software that’s automated and intuitive. You can use any bookkeeping software that makes sense for you. There are also online systems designed to support landlords who are renting out only one or two homes, and without the benefit of a professional Eureka property manager.
At renewal time, you’ll need to negotiate a new rental rate with your tenants.
Statewide rent control laws in California will limit how much of an increase you can implement, assuming that your investment property is covered by these laws. If you’re exempt, your lease agreement will need to reflect that.
If your property is covered by rent control laws, make sure you know how high you can go. Study the market as well. Tenants are going to decide whether to leave your property or renew the lease and stay for another year based on a number of factors. One of those factors is the rental increase. Most tenants will expect their rent to go up from year to year. But, if you raise it too much, you’ll find yourself with a vacancy and potentially expensive turnover costs.
One thing we always recommend to rental property owners who have trouble collecting rent on time and with ease is this: work with a Eureka property management company. This partnership will bring you many benefits, and the most important benefit is perhaps that you won’t have to chase down late rent. You’ll know your property management experts have a system in place and that they’re earning results.
If you’d like to hear more about how we can help with consistent rent collection, please contact us at Rentor. We proudly stand behind our reputation as a locally preferred property management company in Eureka and surrounding areas in Humboldt County.
3109 H St. Eureka, CA 95503
707.444.3835
Support@Rentor.com
DRE# 01527620
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