As a landlord, one of your most important responsibilities is to manage your tenants.
This means two things:
1) getting monthly payments on-time and in-full, and 2) making sure your property is being taken care of. Generally, property owners who fail are the ones who cannot accomplish one or both of these tasks. They either have tenants who haven’t paid the rent in ages, or their property has been destroyed and left in shambles. Either way, the landlord is bound to lose money and face quite a bit of unnecessary stress. Most of this cost and stress can be avoided by being conscientiously up-front and firm from the onset of your relationship with a tenant.
During the application process, make it very clear to the potential tenant that your business is very strict about the two tasks I mentioned above. Clearly state that if payments are not made on-time and in-full, or if the property is not properly taken care of, then the tenant will be evicted without a moment’s hesitation. Generally, this brief but important conversation can eliminate a whole population of “professional tenants”—those who enter into rental agreements with no intention of paying the rent, and live there for as long as they can before the landlord finally forces them on to the next location. Don’t give anyone the impression that you can be taken advantage of during the application process.
Once you have your tenant under contract, consider charging late fees on rental payments. This will keep your tenants in check, and train them to respond to your rules and regulations. If they know there are no consequences for making a late payment, then they will not respect you, and you will be paid whenever your tenants get around to it. Most rent is due at the 1st of the month—make the rent late after the 5th. Charge a percentage of the rent (5-7% is reasonable), and enforce it. If you don’t enforce the late fee policy firmly and consistently, then it is worthless. Don’t let a tenant slide simply because it’s the first time he’s been late; if he faces the penalty, it will be the last time as well.
In addition to commanding the respect and obedience of your tenants, the late fee will also help put a little extra cash in your pocket. Anything that increases your property’s monthly cash flow is good for business, especially when it ensures continued on-time payments in the process! Although it may be difficult to establish yourself as the enforcer over your tenants, remember that you run a business, and you must maintain control over your interests.
What do you think?