I find that most new real estate investors are too soft on rent collection. Unless you have training or experience in collecting debt, this is not a natural process for you. Many people don’t like confrontation and rent collection is about putting someone (the tenant) on the spot.
Here are a couple quick tips when you are “dialing for dollars” to make it easier to collect rent:
- Be consistent about calling immediately upon the rent being late. If the tenants sense that you are not concerned about the rent, they won’t be either.
- If you can’t get them on the phone, drive over there. There is nothing more important to you and intimidating to them to have the landlord standing at the door at 8pm at night.
- Impose the late fee every time.
- Mail statements to everyone that owes anything over $5. Make sure to get them in the mail or hand delivered immediately upon the rent being late.
- If you get a partial rent payment, immediately call and find out when the rest of the rent is going to be paid. Send another statement with the updated balance.
- When you are talking to the tenant about paying the balance or when they are going to pay, push a little to pay more or sooner. Most people (the tenant) will give in to authority when asked.
- If the tenant does not live up to their commitment, start eviction immediately. It is better to evict early than let it drag on and having them owe you more money. Most tenants can not recover from being a full month behind.
- If your tenants tells you they are paying you next Friday, call them a day or two before and remind them that you are expecting rent and how much you are expecting. Again, if they believe you won’t call or check in, they may/will blow you off.
We own investment properties not because we have nothing better to do, but to make a profit (either short or long-term). Rent collection is the key to being a successful landlord. You need this rent/income to keep your business solvent.