5 Mistakes Landlords Make With Incoming Tenants

Most property managers feel a huge weight lifted off of their shoulders when they begin to get calls from people interested in renting out a property.

The likelihood that an empty property will soon start generating money is enough to put a smile on anyone’s face.

Unfortunately, there are several mistakes that property managers make when bringing in new tenants.

These mistakes can potentially land you in hot water, so avoiding them is essential.

1. Not Making Disclosures to Tenants
Although laws may vary, each state has disclosure requirements related to incoming tenants.

These are rules about information that a landlord must disclose before renting out a unit.

For example, in horror movies, you have probably seen instances in which real estate agents disclosed recent deaths in a household; this is a real requirement in some states.

It’s important to note, though, that there will likely be other things that must be disclosed.

Laws about lead paint disclosure, for instance, are very common.

Additionally, landlords may have to disclose the presence of mold or even sex offenders that they know of who live in the area.

Knowing these state-specific laws is essential.

2. Mistakes in The Screening Process
There are a host of screening errors that can lead to less-than-satisfactory tenants moving in or even legal action being taken.

The Federal Fair Housing Act, for instance, prohibits property managers from asking certain questions that may be viewed as discriminatory.

Questions that seem to focus on familial status, religion, national origin, or other protected statuses could land you in court.

Landlords may also make mistakes when conducting screening related to background checks.

If you’re not careful, you could end up using an untrustworthy background check website that doesn’t discover all relevant information.

Fortunately, there is online property management software that can perform the appropriate background check with ease.

3. Not Correcting Potentially Dangerous Conditions
One potentially serious mistake is not correcting known hazardous conditions.

While it may seem like a hassle to fill in the hole the last tenant’s dog dug, fix the deadbolt while the lower lock still works, or provide sufficient outdoor lighting in a neighborhood with criminal activity, failing to fix any of these situations can land a property manager in court.

In most areas, landlords are required by law to create safe environments for their tenants.

If they fail to do so, they could be held responsible for damages.

In the end, it’s simply safer to correct all hazardous conditions before handing the keys over to a new tenant.

4. Rental Application Errors
Another common error when bringing in new tenants is related to rental applications.

Many landlords simply download the first application they come across on Google and continue using it forever. Unfortunately, these applications may be outdated, and in many cases, language contained in these “one-size-fits-all” applications may not even correlate with your state’s laws.

Additionally, creating your own application harbors the same potential dangers.

You run the risk of inputting language that simply cannot be upheld legally in your area.

Fortunately, many of the aforementioned property management software suites provide state-specific rental applications.

5. Letting Your Mouth Write The Checks
In an effort to quickly rent out a property in an improving economy, it becomes second nature to speak highly of a property and even make promises that certain improvements will be made.

Once these promises are made, though, it’s essential that you follow through.

Even if these promises aren’t in the lease, the incoming tenant can break the lease or take you to court for the value of the difference.

Without the promise directly written in the lease, there’s no guarantee that they’ll win, but the time and money expended dealing with this issue is hardly worth it.

Being a property manager is an undoubtedly difficult job, but the aforementioned mistakes can turn a tedious task into a nearly impossible one.

Fortunately, all of these mistakes are easily avoidable.

With just a few proactive measures and the right tools at your side, your mistakes with incoming tenants can become a thing of the past.

Top 10 New Technology Solutions for Realtors

As a realtor, you handle many duties — from connecting with new clients to scheduling open houses. If you try to handle every aspect of your business operation manually, you can’t maximize your productivity if you spend more time on administrative tasks than you do with duties requiring a human touch. Implementing technology in your day-to-day operations can help make more productive use of your time while providing an even higher quality of service to your clients. In turn, clients are increasingly looking for more online solutions these days. Using technology to streamline your business is a win-win situation.

  1. Online Forms

Make it easy to stay on top of paperwork by keeping digital forms. Your listing inquiry forms, property paperwork, rental applications and other paperwork can be filled out online and submitted to you without requiring an extra trip to deliver them in person or depending on fax machines or scanned documents. You can then easily pair your online forms up with electronic signing (see below).

  1. Online Scheduling

Trying to find a time when you and/or a colleague is free at the same time as your clients is time-consuming, not to mention, confusing at times. This is where online scheduling tools come in handy. Your clients can book a time that suits them from a list of times that you have previously approved. No need for calls and back-and-forth emails. Acuity and Calendly are great scheduling tools to try out.

  1. Customer Relationship Management

Do you provide timely feedback when a potential client contacts you about listings? Do you have your clients’ contact details and preferences saved somewhere easy to find? A customer relationship management (CRM) tool helps you stay on top of your client contacts. You can sort messages, make notes, attach files and schedule follow-up contact through email, phone or in-person meetings.

  1. Email Automation

Another tech option is email automation. You can auto-respond to emails, address common questions and reconnect with previous clients. You can also set up emails to automatically send clients new listings that meet their parameters and other time-saving configurations. If you use an email marketing tool like MailChimp or ConvertKit, you can also deliver regular newsletters to your clients to keep them in the loop and ensure that your company remains front and center in their minds.

  1. Video Marketing

Video marketing can benefit your business in a number of ways. You might want to send your clients a quick video message introducing yourself – a personal touch and a great way to put a face to your name (and help you stick in their memory). Platforms such as Facebook and Instagram are giving preference to video content which means that if you are including video in your marketing strategy, more people are likely to see that content over standard text and image content. You can also use video to showcase your properties that allow people to get a much better idea of exactly what is on offer and view it at a time and place that suits them.

  1. Cloud Storage

Photos, videos and other media are likely just sitting on your computer’s hard drive, USB drives and SD cards. Instead of searching through multiple drives when you need a particular listing’s media, you can consolidate your media into a cloud storage service such as Google Drive. Using cloud storage also means that your team members can access and share those files from anywhere which will save time when you don’t have to keep searching for them or resending them via email.

  1. Social Media Scheduling

Social media sites provide a valuable way to connect with potential clients, but you need to post at specific times to get the widest audience for your content. Instead of sitting at your computer to update your social content, you can use a scheduling tool like Buffer or Hootsuite to automatically post your message at a scheduled time. Most of these tools will recommend the best time of day for you to post based on when your audience is the most active and offer sophisticated analytics to help you figure out which strategies are working well and which need to be tweaked.

  1. Automated Listings

Instead of manually inputting listings on multiple sites, you can use a service that posts your listing across all of them automatically. This will maximize your property’s visibility by putting it on as many sites as possible while also saving time in the process.

  1. Floor Plan Software

You provide renters with plenty of property information through video tours, photos and descriptions, but it’s still a challenge for tenants to visualize being in the property before they actually tour it. To increase your chances of matching tenants with the best property for their needs, you can provide detailed floor plans to give them another way of sorting through properties before they request an in-person tour of the property.

  1. E-Signature Software

If there’s one thing that is certain, it’s that any real estate transaction requires a lot of signatures. Trying to find a time and place to collect those signatures from different parties can be time-consuming and often frustrating for everyone involved. Using a tool like HelloSign or DocuSign means that you can send documents to the relevant parties, they can sign them electronically and then return them to you in a matter of minutes.

Maximize your working hours by putting technology in place to automate and streamline many of your day-to-day realtor business processes. Whether you need a way to find listing photos or quickly post new listings, these tools give you many choices. You can spend less time on repetitive, administrative work, allowing you to focus your energy on bringing in new business and wowing prospective tenants.

Investment Property Checklist: What to Look for Before Buying

The single largest purchase most Americans make is a house.

When buying investment property, you repeat that purchase to scale — many times if you’re successful.

Before you sign for an investment property, however, you’ll want to be reasonably certain that the unit will turn a profit.

Here are a few things to check out before you make an offer.

1. Location! Location! Location!

In real estate, it is all about location.

A home on one side of a street might go for 50 percent more than a home on the opposite side.

In New York City, the median rental price for a one-bedroom unit is $4,200 in Tribeca, while the neighboring Lower East Side offers a much more affordable median price of only $2,570.

One block can put a property in the highly desirable Tribeca area or the much less in-demand area of the Lower East Side.

2. Check the Tax Rate

Property taxes may be deductible, but they can also eat up a large portion of the profit on a rental.

In some cases, the taxes on commercial property are much higher than on homes for personal use.

Additionally, some properties have temporary tax credits in place that keep the valuation lower for a set period. The last thing you want is to face a sudden balloon on the property tax assessment.

3. Good Schools Are a Plus

When buying a property to live in, you should always check the surrounding schools, and the same goes when buying an investment property.

Good school districts often mean a more stable housing environment, which can play an important role when you eventually decide to sell.

Plus, they might act as a draw for tenants that have or are considering a family.

4. Crime Rates

Crime can devalue your property and make it harder to find tenants.

Everything from petty theft to vandalism can become a problem if it happens too frequently. If crime is an issue, be sure to look for trends that might indicate a neighborhood improvement.

If crime is on a downturn, it might pay to buy into the community while it’s undervalued. Run a thorough check on all of the crime reports and trends for the area before buying.

5. Vacancy Rates

If there are many empty units, you might not want to buy in that area.

Lots of units mean lots of competition for tenants, which often means lower rents.

The less competition there is from other landlords, the more likely you are to be able to start your property off as a profitable endeavor.

6. Average Rental Rates

To find a profitable investment, you need to know what you can expect a property to bring in on a monthly basis.

Be sure to look at the price per bedroom and per square foot when trying decide.

No two properties are the same, so a very spacious one-bedroom might bring in almost as much as a cramped two-bedroom. Look at the return based on square footage to get a better idea of the potential return on a particular property.

7. Inspect Thoroughly

A house can come with a lot of problems that might not be obvious during a casual walk-through.

Look for signs of water damage, check outlets for possible electrical issues, ask about recent repairs, etc.

Also, be sure to work with an inspector that knows you want a complete repair list. If you know about upcoming maintenance, you can plan for the expense.

When investing in real estate, you can earn back the purchase price in rental fees and reap rewards at the end when you sell the property.

The challenge lies in choosing the right property for your investment. Follow these tips to help narrow down the options.

Guidelines for Pets on a Lease

Landlords who lease to pet owners open up an array of new renters who are ready and willing to pay top dollar for a happy home for their furry friends.

However, many property owners look askance at dogs and cats, deeming them dirty and destructive.

While it’s true that some pet owners are negligent and some pets may be destructive, this isn’t always the case. It’s usually a good idea to rent to pet owners, as long as you take a few necessary precautions.

If you follow the guidelines below, your lease will likely be a success.

1. Know which pets will be living in your home.
If you decide to rent to pet owners, don’t just rent to any pet owner.

Ask owners for specifics about their pets—what breed are they? How large are they? How old are they? (Puppies tend to be more destructive than older dogs, so age is important.)

You’ll also want to know the total number of pets that will be living in the house.

If the property has a backyard, you might also ask how many pets will be living in the house and how many will be outdoor animals, as outdoor animals tend to be less of a problem for property owners.

When you get the specifics, put them in writing and also state that the renter must inform you of any new pets.

2. Ban some pet types if they make you uneasy.
Many owners allow most pets but prohibit certain types or breeds.

For example, you might only allow small dogs under a certain weight limit, or you may only be comfortable with cats.

There might be certain breeds of dogs that make you uneasy (For example, if chihuahuas make you cringe, don’t allow them. After all, you have the final say.)

You can place limits on pets and still attract a wealth of renters.

3. Ask to see veterinarian records.
Responsible pet owners keep their pets vaccinated.

It’s not unreasonable for landlords to request these records.

Current immunizations protect the tenant, the pets, the neighbors, and you.

Pet owners who are responsible enough to keep their pets up to date on shots are generally responsible enough to prevent their pets from being destructive as well.

4. Verify your insurance coverage.
Before you advertise your rentals as pet-friendly, make sure your insurance policy is pet-friendly, too.

Most policies have no problem with pets, but some have their own sets of requirements that you’ll need to keep in mind as you rent the unit.

5. Add a clause to your lease agreement that explains pet conditions.
Everything you decide and communicate to your tenants should be explained clearly in a pet clause within the lease, including breeds, requirements, etc.

If the tenant breaks any of the rules you discussed, you will have better legal recourse.

6. Charge an extra damage deposit.
In addition to your regular damage deposit fee, you should also charge a pet deposit, preferably one per pet.

The average fee varies greatly from one city to the next, so check with other property managers in your area for a good idea of the going rate.

This deposit should be reasonable enough that pet owners will be willing to pay it, but high enough to cover any damage their pets may cause to your home.

Many cities or states have maximum amounts you can charge by law, so check with your jurisdiction for guidelines.

7. Consider charging higher rent.
Because rentals that allow pets are in high demand, it’s possible to charge higher rent for your unit.

Consider raising the price a bit and see how many interested applicants you get.

You can always lower the price if no one bites (pun intended) at your offer.

 

Managing expectations for outgoing tenants

Few people enjoy moving. Whether it involves a rental or a home you own, moving can be an expensive hassle.

The same is true for your leased properties.

The turnover process can be a fraught time, with conflict, confusion and surprise expenses.

It doesn’t have to be, though.

With a bit of planning and lots of communication, you will be able to have a smooth turnover process with your outgoing tenants.

Communicate Early and Often
As with many aspects of the landlord-tenant relationship, communication is key.

As part your workflow as a landlord, you should regularly be in touch with your tenants.

This will help you stay on top of issues with the property and identify any problems with the tenants should they arise.

Discussing the tenant will be staying past the end of the lease should be a part of these conversations as the lease comes to a close.

Remind Tenants About the Terms of the Lease
What that communication looks like will depend on the terms of the lease.

Your lease should contain a clause establishing terms for providing notice.

Whether it’s 30, 60, or 90 days, you should remind the tenant about those terms.

Many tenants will have forgotten, or not have read them in the first place.

You should also remind your tenant about what the options are as the lease comes to an end.

Does the lease automatically shift to month-to-month? Does it have to be renewed for a full year? Will you be increasing the monthly rent?

These are all things that should be clear to all parties involved in the rental agreement, and should be made clear well in advance of any deadlines.

Establish and Confirm Move Out Logistics
If your tenant will be moving out, firmly establish a move out date.

Establishing this expectation early will make sure you have time to turnover the apartment before the next tenant arrives to take over.

Your current tenant might not start his or her next lease until the 1st of the next month, so if your lease ends on the last day of the previous one, you will want to make sure he or she is aware of that and plans the move accordingly.

Set Clear Expectations for Conditions
It is also important that all your tenants are aware of your expectations for what the property will look like when they leave.

The lease is your friend here. Remind the tenant of what was already agreed upon in terms of the condition of the property, and explain what that means for you.

Set the tenant up for success by explaining in detail what you will be looking for in your inspection.

Your tenant wants the security deposit back and will do whatever is necessary to get it.

If the tenant puts in the work to have the rental in good shape, it will save you cleaning time or money for a cleaning crew.

Be Prompt with the Security Deposit
As part of building your reputation as a landlord, it is critical to be fair and prompt with the security deposit.

If there are issues, be objective and transparent in how you calculate the docking of the deposit.

Regardless, send them the amount of the deposit they are owed within a reasonable and agreed upon amount of time.

Both of these practices will go a long way in establishing your professional reputation.

Following these tips will set you and your tenants up for success in the turnover process.

How To Ask a Tenant to Move Out

Some tenants are just problematic.

Others are great people, but there comes a time when change becomes necessary, and even the best tenants need to be asked to move out.

This can be a tricky process, especially if the rental arrangement has been a multi-year relationship.

The easiest way to start this process is to meet the tenant in a neutral location.

Offer to buy them some coffee or maybe even lunch.

Discuss your situation and why you need to have them move out of the property.

With enough notice, most tenants will move – though they won’t be happy about the need to move.

My Tenants Are Nice, But They’re Stubborn

If there is still a leasing agreement in place, landlords often need a legitimate reason to ask tenants to move.

If there isn’t one, then the lease stays in place until it expires.

Some tenants are stubborn and want to stay until the end of their lease.

Providing them with an incentive, such as a portion of their moving costs or agreeing to return the entire security deposit unless there is extensive damage, can help to prompt a move.

My Tenants Have Small Children

Kids or pets, for that matter, can make moving on short notice problematic.

There may be daycare concerns, a lack of available housing, and other issues which make finding an affordable rental next to impossible to achieve for certain families.

If you know in advance that your tenants need to move and they have kids, pets, or both, then reach out to other landlords about other rentals.

Being able to provide a housing alternative when asking tenants to leave can help relieve the anxiousness that many families have about moving.

Sometimes the Legal Process Must be Followed

Tenants may decide that they don’t want to move.

They might even decide to stop paying their rent.

You can keep asking them to move out, but ultimately it takes a court order to make that happen.

Make sure you are familiar with the entire eviction process to ensure no errors are made that can cause a tenant to have a prolonged amount of free rent.

Waiting just prolongs this process.

It is better to ask now and work with your tenants to get them moved out than to go through the costly eviction process.

How to Convince Renters That Your Home Is the Best

When the rental market is small, you’ll have little trouble finding a suitable tenant for your home.

However, when the market is flooded, you’ll need to do a little advertising to convince prospective tenants that your rental is the best option for them.

When you’re developing an advertising strategy, make sure you include these key points.

1. Create a website with great images.
This is the digital age, and nearly everyone uses the internet to make big decisions.

If you don’t have a website, you’re missing out on one of the cheapest, easiest forms of advertising.

It doesn’t cost much to set up a site, and you can hire a web designer to do all the work for you.

The most important thing to include on your site is a gallery of clear, professional-quality photos of your rental.

If you include your contact information with photos, you can even set up viewings of the rental with prospective tenants via email correspondence or a contact form on your site.

2. List the amenities and best-selling features of your home.
You should also note all the wonderful extras your home has to offer.

This list should include absolutely everything that may set your rental apart from others; don’t skip anything just because it doesn’t seem important to you.

People have unique tastes, so what seems unimportant to one person may be the perfect amenity for someone else.

You should include a list of rooms, as well as a floor plan.

You might also include the bathroom setup (shower, tub, combo shower and tub, etc.), as well as whether the kitchen has gas or electric appliances.

Renters love to know these little details.

3. Accept pets.
Many renters are looking for a home that accepts their furry critters with open arms.

If you don’t mind pets (with a deposit, of course), then state that clearly in all your advertising.

Not only is this a great way to entice potential renters, but it’s also a great way to make a little extra cash.

By accepting pets, you can usually charge a pet fee or increase the price of your rental with few to no issues.

4. Include a list of nearby attractions, restaurants, and entertainment.
Some renters may not be familiar with the area, especially if they’re moving to your city from another state.

You can help ease any worries they have about your location by listing nearby attractions, restaurants, and entertainment options.

You might also include the closest schools for renters who have children.

5. Be open to requests.
If your applicant has special requests, be receptive as long as they’re reasonable.

For example, many renters long to decorate the home according to their tastes.

You might agree to a new paint color as long as they stick to neutral colors or repaint with your preferred color before they move out.

If they want small changes, such as new carpeting in a bedroom, you should consider changing it out if it’s dingy or outdated.

If one prospective tenant has this concern, it’s likely that others will as well.

The cost of new carpet may be negligible compared to the carrying costs of another month without a renter.

There are many ways to entice renters, but the most important thing is to be personable and friendly. No one wants to rent from a grumpy landlord.

If you advertise your home accurately and stay open to specific requests, you’ll likely have a renter in no time.

Best Legal Documents for a Beginner Landlord

You invest time and energy into your new rental property, and you want to protect your investment.

Handing over the property keys to your new tenants can be nerve-racking, as you are trusting them to respect and maintain that investment.

To protect yourself and your rental property, you need to acquire several legal documents.

These rental documents will ensure that you are compliant with your state’s landlord-tenant laws; they also give you legal recourse in the event that something goes awry.

1. Rental Application
To begin the renting process, you will need a steady supply of rental applications to document each potential tenant.

This simple form gives you all of the information necessary to perform background and credit checks, and it may also reveal your applicant’s serious or fickle intentions.

Check any employer or previous landlord references, establish that your rental applicant can make the rent each month, and ensure he or she has good rental responsibility.

2. Rental Agreement
Once you have chosen the renter(s) for the property, you need to create a rental agreement or lease agreement.

This is a binding legal contract between the renter and yourself, spelling out the exact details of your agreement, including the length of the lease, the exact location of the rental property, the amount of rent, when the rent is due and payable, and any other stipulations you may have, such as pets or no pets.

Each state has its own laws regarding the exact language to be used and if certain elements cannot be included.

Ensure you conduct thorough research.

3. Eviction Notice
No one wants to think about the worst case scenario.

However, it’s best to be prepared if your tenants are unable to make their monthly rent payments, or if they break the lease in another way, such as subleasing the property.

The only legal way to evict inappropriate tenants is with an eviction notice, which may have a different name depending on your location, such as demand of possession.

Once you notify tenants, you start the clock on the eviction process.

This process differs based on your state and whether the tenant is being evicted due to non-payment or other factors.

4. Notice to Enter
You should check on your property from time to time, to ensure that your renters are taking care and not violating any terms of the rental agreement.

However, you cannot stop by unannounced; the tenant is entitled to his or her privacy.

Therefore, you must give your tenants a notice to enter at least 24 hours in advance of your visit.

This gives your tenant enough notice to make sure that he or she will be home (if necessary) at the time of your visit and is in compliance with your legal responsibility as a landlord.

5. Notice of Non-Renewal
Sometimes you don’t want your tenants to stay for another lease term.

This may happen because you no longer want to rent out the property, or you may choose to move someone else in instead.

To give your renter(s) adequate notice to find a new place to live, you will need a notice of non-renewal.

State requirements vary widely on how much notice you need to give, but generally, the more notice you give, the better.

While there are many more forms that a new landlord may need, these five documents will give you the confidence to move forward in renting out your first property.

Find your locale’s requirements on the exact language needed and the time lines necessary to execute proper documents.

Many of the initial difficulties of renting out a property will be alleviated with the right paperwork.

When Should You Deduct from a Security Deposit?

A security deposit is often, but not always, equal to one month of rent. Ideally, it helps the landlord or property manager pay for any repairs or cleaning that the property needs when the tenants move out. When the cleaning is over, the landlord sends their tenants a check for what remains from the deposit.

It sounds simple, right? Unfortunately for novice landlords, it’s hard to know exactly what to charge to a security deposit. Any miscalculating — whether accidentally or on purpose — is a great way to get angry tenants and a bad reputation for yourself.

Why Should You Give Back A Security Deposit at all?
Some landlords make their tenants hunt them down to give back their security deposits. Others don’t refund security deposits at all, effectively levying an extra month’s worth of rent from tenants.

These practices aren’t legal in a lot of jurisdictions, and you may find yourself in small-claims court if you don’t refund a security deposit when necessary; check your local laws to learn the details. Additionally, refusing a deposit refund makes your tenants very upset because, for a lot of tenants, a security deposit is a lot of money. Even if you never hear a bad word from your renters about it, their family and friends will — not to mention the whole Internet. Future tenants become much less likely to rent from you if they hear that they probably won’t get their security deposit back. Being unable to rent your properties out is not worth the money you get from holding onto the security deposit.

Therefore, it’s best to give back your security deposit. If there’s a delay, communicate that to your tenants. If there’s a dispute between you, remain as straightforward and clear as possible while always holding onto all records of your communications about the rental agreement.

Security Deposit Deductions 101

When your tenants move out, you’re likely to find wear and tear on the property: paint peeling, smudges on the walls, scratch marks and so forth. You can also discover actual damages: holes in walls, broken windows or torn carpet. Only heavy damage is generally considered fair game when deducting from a security deposit.

Remember that even a model tenant can have deductions from their deposit. As you walk through, photograph all damages so that you have a record if the tenant disputes your charges. Remember also that not all damage in a landlord’s eyes is damage in a tenant’s eyes. For instance, imagine that your tenant painted a wall a different color. It may look nice, and the tenant may have had the best of intentions. However, if you need to repaint the wall, that’s still property damage — especially if they never communicated it to you. If they did tell you before painting and you said it was fine, then billing them later isn’t fair — even if you changed your mind.

If you need to call in a repairman or a cleaning team after tenants vacate the premises, so that they can do badly needed cleaning, billing the tenant out of the security deposit is fair. If it’s a standard practice at your properties to call in professionals — to repaint all walls in your properties, for example — don’t deduct unless the damage goes above and beyond normal wear and tear. If you yourself are doing the repairs, keep a close eye on your time, and then you can bill tenants for your own work as you would for a professional doing the same job. Security-deposit deductions aren’t just to compensate for the time spent on repairs; they also pay for new materials. It’s also fair to bill out of the security deposit for anything that needs replacing, like doorknobs, hooks or appliances.

As a rule of thumb, any damage you don’t find within a week or so of your tenant’s departure isn’t eligible for a security-deposit deduction. If your new tenant finds damage a month after moving in, billing the old tenant for it isn’t really an option.

These deductions can add up. Keep a carefully itemized record of deductions. Ideally, give that information back to the tenant when you send back what remains of the deposit. Don’t forget to leave them your contact information so that they know how to get in touch with you if they dispute any charges.

 

How To Get Tenants to Pay Rent on Time

One of the biggest problems that landlords face is getting tenants to pay their rent on time.

You can speak with them every month about making late payments and it doesn’t do any good.

If you’re tired of having your words go in one ear and out the other, then here is how to get a tenant to pay rent on time in a more proactive, strategic manner.

1. Create a Rental Discount.

If you are having tenants consistently pay their rent late, then maybe it’s time to develop a new leasing agreement.

Add $50-$100 to the amount of rent that you plan to charge.

If the tenants pay their rent before the due date or on time, then they get to have this additional amount discounted from their monthly rent.

If they pay late, then they are subjected to this higher rent.

Some landlord/tenant laws require this additional amount to be a late fee, so make sure you structure your leases according to local regulations.

2. Lower Rental Amounts For Renewals.

This might hurt your bottom line a little, but it can also help to promote more on-time payments and better tenants.

Many markets have high rent levels that are a struggle for households to afford.

Consider adding an addendum to your leasing agreements which creates a lower rent after 12 consecutive on-time or early payments.

You’ll keep vacancy rates lower over time as the changes filter on down and though you might have a lower margin, you may wind up with more overall profits.

3. Setup ACH Rental Payments.

Lenders are using automatic payments as a way to guarantee payments and finding great success with it.

You might be able to do this with your tenants as well.

Create a time when the amount for rent will be withdrawn from the tenant’s bank account every month.

If problematic tenants are willing to sign up for this service, consider giving them a 5-10% discount on their rent since they’re doing you a favor.

This will give you a better chance of making sure you get paid.

Now ACH payments are only as good as the amount of money that happens to be in the bank account.

Not every tenant will have the needed rent payment available at the time of withdrawal.

Make sure you have a clear and precise return payment or rejected payment policy so that you can begin the eviction process immediately and have a way to recover the fees that may come when a full payment cannot be made.

4. Offer To Build Up Their Credit Score.

Many renters are in a place where they could use a boost in their credit.

They might be renting because of a foreclosure, a bankruptcy, or because of prolonged unemployment.

Landlords have access to services that will report on-time rental payments to the major credit bureaus and increase a credit score over time.

This also works in the opposite way as well.

You’ll also be reporting payments that were not paid on time and that can negatively affect a tenant’s credit score.

5. Hand Out a Holiday Bonus.

Do you think you can take out $5-$10 from the rent that is getting paid every month?

If you can, then consider putting this cash into an interest bearing account.

When an on-time payment is made, put the amount into this account. You might even consider matching the funds.

At the $10 rate and if you decided to match the funds that are in the account, then up to $240 could be given to a tenant at the end of the year.

They’ll have some extra cash for the holidays and you’ll be getting more on-time payments.

If you don’t want to cut tenants a check, you could put the amount onto a gift card as well.

6. Consider Different Rental Payment Arrangements.

Maybe your tenants struggle to pay their rent on the first of the month.

Some self-employed or contract workers might not know when their outstanding invoices will be filled.

By being flexible with the rental date, you may find tenants are better able to meet their contractual obligations.

That doesn’t mean you should have a floating payment date every month because that would make evictions nearly impossible.

It does mean that your due date doesn’t have to be the 1st of the month.

7. Make It Easier To Pay.

Do you have a slot for tenants to pay with a check at your office?

Is there a website you have that can process payments after hours?

If you can expand your collection areas, methods, and types of payment accepted, then you’ve got a chance to improve the number of on-time payments that you could receive.

If you have a grace period for rental payments, then a tenant isn’t late on rent until that grace period expires.

You can say rent is due on the 1st of the month, but if you have a fee-free grace period up until the 5th of the month, then rent isn’t legally due until then.

If you’re tired of tracking down tenants month after month, then consider removing any grace periods and implementing these ideas to create a proactive environment instead.

It could help you improve the profitability of your rental properties.