So you’ve sealed the deal and purchased your first rental property. Now it’s time to start watching the rent roll in; Not quite. While collecting rent can seem relatively straightforward, there are a few sticky situations that inexperienced landlords can run into if they aren’t careful. Here’s what every new landlord should know about rent collection.
Be Proactive with a Rent Collection Policy
They always say that an ounce of prevention is worth a pound of cure, and the same is true when it comes to collecting rent. As part of your lease, we suggest including a rent collection policy. Here are the essential things that should your rent collection policy should include:
So you’ve sealed the deal and purchased your first rental property. Now it’s time to start watching the rent roll in; Not quite. While collecting rent can seem relatively straightforward, there are a few sticky situations that inexperienced landlords can run into if they aren’t careful. Here’s what every new landlord should know about rent collection.
Be Proactive with a Rent Collection Policy
They always say that an ounce of prevention is worth a pound of cure, and the same is true when it comes to collecting rent. As part of your lease, we suggest including a rent collection policy. Here are the essential things that should your rent collection policy should include:
- When is rent due?
- How will rent be collected?
- What payment methods do you accept?
- When is rent considered late?
- How are rent payments documented?
- What fees are imposed on late payment?
- When will the eviction process start?
- When is rent due?
- How will rent be collected?
- What payment methods do you accept?
- When is rent considered late?
- How are rent payments documented?
- What fees are imposed on late payment?
- When will the eviction process start?
Establishing and enforcing your policy sets a good foundation of expectations for all parties, which can further alleviate issues down the line. You can find a free rent collection policy temaplate on our partner, PayRent’s website.
Collect Rent Safely
While most tenants are peaceful, situations can become volatile when someone’s living situation feels threatened. To avoid this, here are some things you can do to protect yourself as a landlord.
- Screen your tenants. The more you know about your tenant’s background, the safer you will be as a landlord. Don’t be afraid to run a background and credit check on applying renters.
- Don’t collect rent in person- Have your tenants pay rent online, mail checks to a p.o. Box, or put their rent in a dropbox.
Establishing and enforcing your policy sets a good foundation of expectations for all parties, which can further alleviate issues down the line. You can find a free rent collection policy temaplate on our partner, PayRent’s website.
Collect Rent Safely
While most tenants are peaceful, situations can become volatile when someone’s living situation feels threatened. To avoid this, here are some things you can do to protect yourself as a landlord.
- Screen your tenants. The more you know about your tenant’s background, the safer you will be as a landlord. Don’t be afraid to run a background and credit check on applying renters.
- Don’t collect rent in person- Have your tenants pay rent online, mail checks to a p.o. Box, or put their rent in a dropbox.
3. Don’t give out your home address- While this is not possible for landlords who live on-site, landlords should never have mail from renters sent to your home address. Set up a P.O. Box for all paper correspondence. It’s also a good idea to set up an email address for your rental business for digital communication.
4. Never disclose your financial information to your tenants. This includes allowing them to deposit funds directly into your account without a middle man. If they can use that information to put funds in, they can also use it to take funds out.
5. Get help for sticky situations. If you need to confront your renter about a situation that could become tense, ask a member of local law enforcement to accompany you, or schedule to meet up in a location that is under surveillance. Many municipalities provide secure locations for online purchase sales or custody exchanges.
3. Don’t give out your home address- While this is not possible for landlords who live on-site, landlords should never have mail from renters sent to your home address. Set up a P.O. Box for all paper correspondence. It’s also a good idea to set up an email address for your rental business for digital communication.
4. Never disclose your financial information to your tenants. This includes allowing them to deposit funds directly into your account without a middle man. If they can use that information to put funds in, they can also use it to take funds out.
5. Get help for sticky situations. If you need to confront your renter about a situation that could become tense, ask a member of local law enforcement to accompany you, or schedule to meet up in a location that is under surveillance. Many municipalities provide secure locations for online purchase sales or custody exchanges.
Protect Yourself from Partial Payments
Some lessons you don’t even know you need to learn until you’re suffering from the consequences. Accepting partial payments is one of those lessons. Accepting a small payment from a tenant could cause you trouble down the line should you ever end up in eviction court. If you are using peer-to-peer payment platforms you won’t be able to block incoming payments from your tenants- no matter how big or small they are. A landlord-specific payment processor will give you control of what payments you will and won’t accept- so that your eviction case is never in jeopardy.
Enforce your Late Fees
While empathy is certainly an admirable quality, it can come back to bite you later. If you choose to be lenient with your tenants when they’ve had a rough month, make it clear that this is a one-time exception, and in the future, you will not be able to make late fee concessions. An online rent collection service can help you to enforce your late fees by only allowing the full payment to be accepted, as discussed above.
Protect Yourself from Partial Payments
Some lessons you don’t even know you need to learn until you’re suffering from the consequences. Accepting partial payments is one of those lessons. Accepting a small payment from a tenant could cause you trouble down the line should you ever end up in eviction court. If you are using peer-to-peer payment platforms you won’t be able to block incoming payments from your tenants- no matter how big or small they are. A landlord-specific payment processor will give you control of what payments you will and won’t accept- so that your eviction case is never in jeopardy.
Enforce your Late Fees
While empathy is certainly an admirable quality, it can come back to bite you later. If you choose to be lenient with your tenants when they’ve had a rough month, make it clear that this is a one-time exception, and in the future, you will not be able to make late fee concessions. An online rent collection service can help you to enforce your late fees by only allowing the full payment to be accepted, as discussed above.
