Dealing with late rent payments is not something any rental property owner wants to be faced with.
It can be challenging to confront those that owe you money, even if you are in the right position to do so.
You may find it is easy to give in and let a late payment slide, especially when your Catonsville tenant has a seemingly legitimate excuse for being late.
However, if you want to become a successful landlord, not only do you need to learn how to deal with late paying tenants, you need to learn how to get your tenants to pay their rent on time in the first place.
After all, late and non-paying tenants are one of the biggest costs facing rental property owners.
Your Catonsville tenant may not feel like paying rent on time every month is a big deal, but for you, collecting rent in full on time, every time, is one of the most important things you can for the success of your rental property business.
That’s why today we are going to share with you some of the best ways to encourage your tenants to pay their rent on time.
5 Ways to Motivate Your Catonsville Tenants to Pay Rent On Time
1. Clear Communication
One of the best ways to get your Catonsville tenants to pay their rent on time is to communicate the importance of paying rent when they move in.
As you and your Maryland property manager go over the lease agreement with your new tenants, it is a good idea to go over every lease provision in the agreement, especially the ones concerning rent, due dates, late fees, and consequences for late rent payments.
Better yet, to ensure your tenants understand what you are communicating with them, it is a great idea to have them initial each page of the lease agreement as you and your property manager explain the rent collection process.
From there, distribute a copy of the signed lease agreement to all parties that initialed the document so they can use it for later reference.
Lastly, include the entire rent collection policy in the tenant welcome package you give your new tenants with information regarding how to pay, when to pay, and how much to pay in rent each month.
This is especially helpful if you require online rent payments.
By creating a document that details every step in the rent collection process, you guarantee that your tenants understand their obligations, and are not confused about the process.
Plus, signed documents give you solid proof you explained the process in the beginning, should you end up in a court dispute with a non-paying tenant.
2. Enforce a Late Fee
Although mentioned briefly above, enforcing a late fee is worth explaining further.
Late fees are strong motivators for getting your Catonsville tenants to pay their rent on time. After all, your tenants don’t want to pay more than they already have to in order to live in your rental property.
Have your Maryland rental property management company draw up a lease agreement provision that explains the late fee process. Make sure that the fee does not exceed 5% of the total rent due, as per Maryland law.
In addition, follow these property management tips for implementing a late rent payment fee:
- Clearly define the grace period in the lease agreement, if you are allowing one
- Avoid waiving the late fees if possible to avoid repeat late payments by the same tenant
- Consider a progressive fee schedule so you get your rent, and any late payments accrued, as quickly as possible
Just knowing that a late fee will apply to any late payments can be a great motivator for getting your Maryland tenant to pay their rent on time.
3. Offer a Discount
On the flip side of charging late fees for those that pay their rent late, another way to encourage timely rent payments is to offer a discount for those that pay their rent early.
If your Catonsville tenant has their rent ready to go a day early, giving them a discount is a nice way of appreciating that they pay their rent on time each month.
Plus, this may even help boost your lease renewal rate come the end of your tenant’s lease term – tenants that receive discounts may be more apt to want to continue to lease from you.
If you are worried about discounted rent rates affecting your bottom line, there is an easy solution: Set your rental property’s rent rate approximately $15-$25 higher than you would normally set it.
Then, when a tenant pays on time, the discount equals a normal rent rate, and you don’t lose any income in the process.
Keep in mind, however, that if you want to offer rent discounts to your early paying tenants, be sure to talk this strategy over with your Maryland property manager to ensure you are making a sound financial decision.
Setting rent rates is central to your success as a property owner, and the last thing you want to do is set a rent rate that is too low, and offer discounts on top of that.
4. Report All Late Payments
Did you know that you are now able to report all late rent payments to the credit bureaus in charge of calculating people’s credit scores?
Well, you can.
People do not like to mess with their credit scores if they can help it.
Credit scores are pulled for many things, such as leasing a home, buying a car, and applying for loans or credit cards. And, keeping a clean credit score is more important than ever these days.
If you inform your tenants prior to moving in that you will report them to the credit bureaus for any late rent payments, they may be less likely to miss a rent due date.
5. Be Consistent
The last thing to remember if you want to entice your Maryland tenants to pay their rent on time is to be consistent.
You must always remain professional, as leasing rental properties is a business, not a hobby.
In addition, you should enforce all of the rules you have outlined in your lease agreement consistently with all of your tenants, no matter the excuse a single tenant provides for paying their rent late.
Not only does staying consistent prevent repeat problems with late rent payments, it helps to preserve your reputation as a rental property owner and as always, will help you defend your actions should you end up in a legal battle with a tenant over late payments, late fees, or even non-payment of rent.
Motivating your tenants to pay their rent on time is not always an easy task, even if you follow the above-mentioned tips and tricks.
That’s why having a highly qualified Maryland property management company such as Bay Management Group on your side is so helpful.
We are knowledgeable about all of Maryland’s rental property rules and regulations regarding rent payments, late fees, and even the eviction process, should a late payment situation go so far as to require eviction proceedings.
In addition, we know how to structure lease agreements so that your Catonsville tenants fully understand what is required of them when it comes to paying rent, and what they face should they decide to pay late.
If you own rental property in the Catonsville area and need help with the rent collection process, contact Bay Management Group today. We have the resources and the knowledge to help make rent collection as easy as possible.