More "Best Ways" to Collect Rent

If you missed my original post on the best way to collect rent, ever, you can read it and get a sense for how nice it is to have the whole process automated.  However, if you aren’t able to get your tenants to agree to an automated rent payment system, there are still other things you can do to improve your chances of collecting from them in full, and in a timely manner.

How To Train Your Tenants To Pay Rent On Time

1. Offer a "rent discount" for paying early – a small $15-$40 discount can create an incentive to get the rent in on time every month.
2. Equity-builder program – for my lease/option tenants, I tell them they will not receive their monthly "rent credit" unless they pay on time each month.  For on-time payments, I will credit them $100-$300 toward the purchase of the home. (This is all agreed upon ahead of time and spelled out in their option agreement.)
3. Become the squeaky wheel – If rent is due on the first and late on the fifth, call them on the first if the rent is not in your mailbox.  Start following-up aggressively with daily phone calls whenever rent is not in to you on time.  Even though the late fee won’t start accruing until the 5th, let them know that you expect to be paid by the first, every month.
4. As soon as rent is late, send a late notice – A Notice To Pay Rent Or Quit.  This legal document starts the first step of the eviction process.  In some areas you can give a 3-day notice, in some areas, a 10-day notice is required.

   In my form, I spell out the back payments that are due, and include the late fees.  I let the tenants know that if I am not paid in full within the 3-10 day period (in certified funds) that I will file an eviction lawsuit.

   Check what counts as having "delivered" the notice in your area.  Personally, I send one copy snail mail and one copy by certified mail so I have proof of having sent it.  You can also go and nail/tape the notice to the door of their house.

5. Register the small claims eviction lawsuit right away.  It can take several weeks to get a court date, and several more weeks to get the tenant out after the magistrate has agreed that they are evicted.  That time is LOST RENT and lost money for you, don’t let it take longer than it should.

   It only costs about $100 to file the small claims case and you can ask the tenants to reimburse this cost if you choose to let them pay up and stay in the property.

   Remember, you can still accept back rent and late fees/legal fees up to the day of the eviction, so the tenants can still have a few weeks of leeway to cure the deficiency if that is their intention.  If they don’t intend to pay, better to get them out sooner rather than later.

   Plus, you are training them that you are serious.  If they know you’ll take them to court and they’ll lose their home right away when they don’t pay, they will be trained to PAY YOU on time, even when they are coming up short on their other bills.

6. Consider hiring an attorney.  If the eviction process seems scary or intimidating for you, or you don’t have time to appear in court yourself, consider hiring an attorney to handle it for you.  This may cost about $500 to have it all taken care of.
7. Once you’ve begin legal proceedings, don’t accept partial payments or schedule a repayment plan with your tenant.  Doing so may re-set the clock on your eviction, and you may have to start the process over.

Remember, every tenant will have a story about why they’re late in paying the rent.  The more you accept these stories, the more of them you will get.  Train your tenants correctly from Day 1. 

If they are financially solvent, you’ll train them to pay your rent first each month.  If they’re not financially solvent, they’ll struggle and struggle with late payments, getting as far behind as you allow.  Don’t let them carry on like this forever, get them out and get someone in who will pay you on time.  It makes for a much less stressful landlording experience.

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