Dealing with late rent payments can be frustrating and costly for landlords, especially when it’s a recurring problem.
Late rent payments can even lead to bigger hassles, like having to go through the Maryland eviction process.
That’s the last thing you want to deal with as a landlord!
If you’re getting late rent payments from your tenants, check out our Maryland property management team’s tips below for collecting rent on time every month:
How to Collect Rent on Time
Offer discounts for early rent payments
Most people, if financially able, will happily pay their rent early if it will allow them to receive a discounted monthly rate. Even $10-$20 off will be enough to win many tenants over and get them to pay you early, so decide on the right discount amount for your situation and let your tenants know!
Offer discounts for auto-pay
Setting up auto-pay for your tenants is an easy way to make sure you get paid on time. What’s not so easy is getting your renters to agree to an auto-pay system.
While they might be hesitant, you can try to sway them by offering to lower their monthly rent if they agree to enroll in your auto-pay program. Then, you’ll get paid on time every month because their rent will automatically draft out of their account, making your job much easier!
Lower rent for long-term renters who pay on time
High tenant turnover rates can cost you a lot of time and money. So, it’s important to keep your best tenants around as long as possible. One good way to do that is to lower their rent.
But don’t just lower it out of nowhere – let tenants know when they first sign their lease that you will lower their monthly rent by a specified amount if they pay it on time for the full duration of their lease period (you can choose a shorter time frame, if you’d like).
Help tenants who pay on time build their credit
Just about everyone can appreciate an opportunity to build their credit.
So, why not use that knowledge to help ensure you get paid on time every month?
Reporting a tenant’s payments to the credit bureaus is a good way to help them build credit and motivate them to pay their rent on or before the due date.
Let your tenants know that paying their rent on time will help them improve their credit score, and you’ll likely notice more tenants making an effort to avoid being late.
Avoid accepting cash payments
Collecting cash from tenants can seem like an attractive option because you can spend it right away.
However, it isn’t a good idea – at all. In fact, doing so can even cause otherwise avoidable issues for you. Here’s why:
- Accepting a cash payment means there is no paper trail for you to keep track of the transaction.
- Cash can be lost easily.
- When a tenant pays with cash, he or she may leave less money than what is required in the rent payment envelope and dispute the amount with you later.
Require your tenants to choose a different payment method so you can avoid the hassle of disputes and late rent collection.
Charge extra for late payments
If there are no consequences for your tenants when they pay their rent late, do you think they’ll put in extra effort to pay on time? Probably not.
So, determine a late rent fee to impose when a tenant is late. While deciding on an amount, keep in mind that landlords in Maryland cannot charge more than 5% of the rent due.
Once you’ve figured out how much to charge, you can begin collecting the late fees as soon as the rent is late or wait a few days – it’s up to you.
You’ll need to have a clear explanation of your late fees outlined in the tenant’s rental agreement in order to enforce it. Otherwise, you cannot legally charge them for paying rent late.
Be strict with your rent collection policy
Tenants will be much less likely to follow your rules if they aren’t strictly enforced. So, when a tenant signs their lease, go over exactly what is expected from them, including:
- The amount due every month (be exact)
- The acceptable payment methods
- The exact due date for paying rent
- The consequences of paying late, bouncing a check, etc.
Once you’ve explained everything in detail, the tenant will understand how and when to pay rent every month, which will help you avoid dealing with any excuses for late payments from them in the future.
That being said, even the best tenants may need to pay late on occasion.
Use your best judgment – if someone has paid on time consistently in the past and takes good care of your property, you may consider waiving their late fee or giving them some extra time to pay their rent. If you choose to do this, make sure you let the tenant know that it is only a one-time deal so they don’t take advantage of your generosity in the future.
Follow-up with late tenants
When a tenant is late paying their rent, follow up with them quickly and work toward a resolution.
When you do this, keep in mind that a healthy tenant/landlord relationship should be approached professionally – not emotionally – so you need to stay calm throughout the process. After all, the tenant might have just forgotten to pay.
To follow up, simply give your tenant a call and try to figure out why the rent payment is late and when they will be able to pay you.
Come to a verbal agreement with your tenant about when they will provide payment, and make sure you collect it on that date. It is also recommended to send a confirmation e-mail to the tenant and requesting a reply, leaving a paper trail documenting your agreement.
Collect all of a tenant’s rent money at once
When more than one person lives in your property, they might find it easier to each pay you separately. Don’t allow this, or you could end up dealing with a huge hassle every month.
Think about it. If your property is inhabited by 3 students, you’ll have to collect 3 separate checks, all of which could end up being late. When this happens, you’ll have to deal with 3 separate follow-ups and 3 late payments.
To avoid this situation, require your tenants to pay you in one single check (or transaction). That way, if the rent is late, you’ll be able to deal with one point of contact and get paid faster.
Choose tenants wisely
Be proactive about getting prompt rent payments by choosing tenants who are likely to pay rent on time every month. You can do this by sticking to a good tenant screening process that includes:
- Checking credit
- Checking employment history
- Checking references (previous landlords)
If you need help screening tenants or would like someone else to take care of collecting rent for you, consider choosing professional property management in Maryland.
Our tenant screening process is so thorough that less than 1% of the tenants we place end up getting evicted! Plus, our rent collection process helps you get paid on time every month via electronic direct deposit or a check.
Interested in learning more about how our Maryland property management team can help make your job as a landlord easier? We’d love to chat – contact us today!