Having an effective rent collection strategy is key to being a successful rental property owner. Unfortunately, an exercise that looks simple can quickly morph into one of the biggest challenges a landlord can face. From chasing late rent payments to dealing with delinquent tenants, it takes great effort to get your money.
But it doesn't have to be that way. As a savvy Chicago landlord, there are strategies you can implement to help make rent collection a breeze.
Learn how to collect rent the easy way below!
Don't Skimp on Tenant Screening
About 50% of renters in the U.S. cannot afford to pay rent, according to a news report published by CNN. Knowing that as many as half of potential renters in Chicago are likely to be rent-burdened should alarm landlords, especially those who aren't keen on tenant screening.
Although there's no precise way to tell whether your tenant will default on rent in the future, tenant screening can help you increase your chances of getting tenants who will make timely rent payments. When checking a tenant's background, pay keen attention to their:
- Credit score
- Employment record
- Income level
- Rental history.
With this information, you can paint a clearer picture of a tenant's finances and use it to decide on their rental application. If you cannot verify an applicant's income sources, for example, you cannot be too sure that they'll have the money to pay the rent every month.
Rent Payment Policy in the Rental Agreement
Across the U.S., rent is due on the first day of the month, with a grace period of about five days. Most renters know this, but that doesn't mean you shouldn't bother to include your rental payment policy in the landlord-tenant agreement. Without a clear policy, don't be surprised when tenants fail to pay rent on time.
Hire a landlord attorney or property manager to craft a policy that fleshes out, among other things, your:
- Rent amount
- Payment method(s)
- Payment schedule - including due date and grace period
- Late fees
- Procedure for handling missed payments
- Security deposit
- Payment for utilities
Before a renter signs the lease agreement, they'll know what is expected of them as far as rent payment is concerned. On your part, enforcing your rental policy will be easier since the renter won't have flimsy excuses like they weren't aware when the rent is due.
Rent Payment Methods
Cash, money orders, and checks are still effective methods of paying rent, but it's not 1990 anymore. Today, digital payment methods are the most preferred way to pay, with 9 out of 10 people in America using them, according to ecommerce tips.
To make the rent collection process more efficient, allow your tenants to pay rent using multiple payment methods, including electronic methods. You can also use a tenant portal to automate the collection of these funds.
Use These Efficient Rent Collection Tips
Rent collection shouldn't give you sleepless nights. However, without a good strategy, that's exactly what you'll get. These tips will help you introduce some efficiency to the process, but the best move is to hire a full-service property management firm to do the job.
At PMI Windy City, we have the expertise, experience, and state-of-the-art technology to revolutionize your rent collection processes. Contact us today to start enjoying our services.
