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What is a trick about collecting rental payments on time?
I would like to do some real estate investing. My fear is the dread of collecting rental payments on time. I work in a real estate environment and hear horror stories. Any secrets that work for you? Amelia's answer is the best. Thanks you!

Posted by Nadia on 09/05/08
Total Answers: 7

Answers-

High late fees. I lived in a townhome community where after the 5th, the late fee for rent was $80! I was never late. You could also put a clause in the lease that if they are late three or more times in one year that they forfeit their security deposit (may not be legal) Also, do credit checks. I hate to say this but people that value their credit are rarely late on bills. Last but not least. Have an incentive pool. In the middle of every month you could have a $20 gift card raffle for those who paid on time. Good Luck

Answer posted by Amelia J on 2008-09-05 11:11:59

Evict people who are late. There are plenty of horror stories around, but you can make money if you are diligent.

Answer posted by rhsaunders on 2008-09-05 11:12:53

Make it a condition of the lease to provide post dated checks for every month.

Answer posted by smedrik on 2008-09-05 11:33:43

amelia seems to make the most sense .. .while the guy below her doesn't.. you just can't simply evict people for people a couple days late... lame!

Answer posted by ya ya on 2008-09-05 12:18:57

Each state has different laws about the maximum amount you can charge for late fees. So where high late fees may be legal in some states they may not be in others. I have 140 units and have very few late payments. We accomplish this by screening our tenants very carefully. We check credit, employment and rental references. If someone has marginal credit we charge maximum state allowed security deposits. Of course location of your rental unit will play into it as well. It will be harder to get good qualified tenants in run down areas. When someone is late, we immediately charged our late fee ($50.00 - although we do give them a freebe the first time) and then serve them with the state provided 3-Day Notice To Pay or Quit. This lets them know that we need to be paid or we will go to court to get possession of the unit back.

Answer posted by jitterbugj on 2008-09-05 13:07:04

I have been a landlord over 20 years and I have found that tenants are more likely to pay on time when they are offered a discount for prompt payment. If rent is $500 and it's due on the first day of the month, they pay just $475 if it's in my hand on or before the first. I don't do late fees, if you can't pay on time you can't afford to live here and I evict.

Answer posted by Classy Granny on 2008-09-05 21:12:04

Your first "trick" would be to place tenants that have a good rental history. Remember to check not only their present (or last) landlord, but also the one BEFORE that. The present landlord may be happy to get rid of them. Your second trick is late fees. Give a short grace period and then descend with a $50 (or so) late fee. Remind them, "Rent is DUE on the first, LATE on the second, and the GRACE PERIOD ENDS on the third. Then do a $5 a day (or whatever) DAILY late fee after that. Your third trick is to make it very plain that you have bills to pay (even if you don't) and that your bank will be charging YOU late fees and ruining YOUR credit if rent isn't paid on time. Your fourth trick is to become comfortable with doing an EVICTION FOR NON-PAYMENT if rent doesn't arrive. I'd say about 95% of the 5-day evictions for non-payment that I do result in payment within those five days. They manage to scrape the money together somehow. If you truly dread collecting rent it might be worth it to you to hire a PROPERTY MANAGER who does this kind of thing for a living; hears all the excuses several times over; can keep track of the payment plans and late rents and fees and such; knows your situation and will act accordingly.

Answer posted by Sagebrush Kid on 2008-09-08 05:40:38

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