In a perfect world, when a tenant signs a lease and agrees to pay the rent on the first of the month, that's what will happen. However, there will always be tenants that don't pay their rent on time, and you, as the landlord, must be prepared. And what you do when a tenant starts to slip will determine your fate, not just for now, but also in the coming months.
Good, thorough screening is the first step to finding a good tenant. But, your job does not stop there. After you accept a tenant, you must follow through and relay the message that you will not tolerate late rent. You never want to send the message that it's OK for a tenant to be late, even if it's "just this once".
Here are some tips to enforcing on-time rent payment:
1. Don't be a nice guy.
2. Make it clear right from the beginning you will not tolerate late rent.
3. Don't be a nice guy.
4. Make sure the tenant knows what actions you will take if they are late.
5. Don't be a nice guy.
6. Explain to the tenant the rent is due on the rent due date and NOT the day before they are charged a late fee.
7. Don't be a nice guy.
8. Explain to the tenant your eviction process upfront with documentation.
9. Consider a daily late fee; this way the longer the rent is late, the more is owed.
10. This is a case where nice guys finish (get paid) last.
Also, be sure to be consistent right from the beginning of the lease. Start out by explaining to your tenants, in detail, the terms of payment in the lease and consequences for late payment.
Then, you must send a sequence of late rent notices, as soon as a tenant becomes late. Let the tenant know your paying attention and you are on top of it. Once a tenant understands that, then they will pay attention and get on top of it. If need be, mark on a calendar when you need send out these notices.
If a tenant fails to pay rent on time, you must follow the letter of the lease. Include a late charge if there is one. Do not negotiate with your tenant on late rent or fees; they tend not to take a landlord seriously and may try to push things farther.
Remember to keep all communication in written or email form to avoid the "he said, she said," scenario.
Finally, don't hesitate to file for eviction. Whether you use an attorney or you do it yourself, you should know your local regulations regarding eviction. Each state, county and/or jurisdiction may institute requirements for items such as the number of days that must pass before you can bring legal proceedings against the tenant. There may be certain notices required such as a "Notice to Quit" before you may even file in a local court. If you've made several attempts to collect the past due rent, follow your jurisdiction rules as soon as possible. Eviction can be a lengthy battle, especially in larger cities.
Create a plan and stick to it. Don't get emotionally involved. Keep it business; after all, you are investing to make money, not lose money.
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