Dealing with the rent showing up days or even weeks late is one of the biggest drawback of rental properties. When a tenant pays their rent late, it can throw off your cash flow and cost your business money. While rent delays can happen despite your best efforts, it’s inevitable you’ll be looking for a few ways to keep them to a minimum.
Thoroughly Screen Prospective Tenants
The screening process is your chance to stop problems before they start by choosing the right tenants. Every time you have a prospective tenant, you should check the following:
- Credit history
- Criminal record
- Rental history
With all of these, you’re looking for any red flags indicating the person may not be a responsible renter. This could be a low credit score, criminal offences or even a habit of bouncing from place to place. Not all of those mean a prospective tenant won’t pay the rent, but they signal the applicant might be irresponsible. Don’t forget to call the applicant’s previous landlords to ask for their rental history, as past behaviour is one of the best predictor of their reliability as a tenant.
Be Clear About Due Dates
When you land a new tenant, make sure their rent due date is clear. A space for the rent due date may be included in your boilerplate lease, but consider using a highlighter to make it jump out on the page, to avoid any confusion. You would be surprised to know how many renters think that "by the 1st" means "sometime around the start of a month."
When you meet with your new tenant to sign the lease is a good time to go over the rent payment methods you accept, which should also be in the lease. The best and most convenient option is online payments, since your tenants can make their payment in seconds using a computer or smartphone. Cheques and money orders are the traditional rent payment method, but you run the risk of tenants dropping their rent in the mail the day it’s due, causing payment delays.
Charge a Late Fee
The unfortunate reality is that some tenants simply don’t prioritize paying their rent on time unless they’re at risk of paying late fees. Even if you’re willing to give tenants some leeway on occasion, it’s still good to include late fee rules in your leases so you have the option to charge them if necessary. It’s wise to base the amount of the fee on the number of days the rent is late. If you just charge a flat fee, there’s no incentive for tenants to hurry up and pay. Make sure you know what’s allowed, otherwise your late fee could be unenforceable. Depending on the laws in your province, there could be a limit on how much you can charge as a late fee.
You don’t want rent delays to become the norm with your tenants. Take the right steps to minimize them and keep rent payments coming in on schedule.