The last thing real estate investors want to deal with when they own rental property is a tenant that fails to pay their rent on time. Unfortunately, real estate investing is not always sheer bliss: there are cases where investors will have to confront and resolve issues created by tenants who exercise bad habits.
Okay, because late rent is one of the most common tenant problems landlords face, let’s examine several steps that you can do to minimize or eliminate it.
1) Create a lease or rental agreement that clearly spells out in detail what the late fees are. For example, include a late fee if the tenant fails to pay his rent by the prescribed time: perhaps $25.00 by the fifth of the month and an additional $5.00 per day starting on the sixth day of the month until the rent is received.
2) Start communicating with your tenant by the seventh or eight-day, and inform them that you have not received their rent and warn them that unless they resolve the issue and make their payment you will be forced to take action. In this case, what action you can take and by when depends on what state you are in. So read up on your states landlord tenant laws.
3) If the tenant fails to respond and still fails to make their rent payment, send a pay or quit notice by certified mail or by the procedures outlined in your states landlord tenant law along with a letter stating all of the negative effects an eviction will have on them and their future.
4) If that fails to jar the tenant, and he does not pay the rent by the last day of the pay or quit notice, file for eviction as soon as possible. If this is your first eviction, you might want to hire an experienced attorney to assist you.
Late payment is never something a real estate investor wants to deal with, and having to evict tenants is typically not savory to most landlords, even if they are deadbeats. But it is needful for you to always follow through with your late rent fees otherwise the message you send a tenant is that it’s ok to be late with the rent. And you don’t want that.
Along these lines, here are some other recommendations. Do not accept a partial rent payment because this can have a negative effect on an eviction. Always avoid trying to get rid of your tenant by intimidation, threats, changing locks, turning off utilities, or physical removal because this is illegal without a final eviction judgment. During the eviction process, stay away from the tenant.
Here’s to your real estate investing success.