For all of the horror stories that landlords offer, renting your property and having someone else provide you with cash flow can be an amazing thing. For the tax benefits alone, renting can provide a tremendous benefit every year. With that benefit comes the grunt work of taking care of the property and collecting the rent checks every month. While this may seem like the easiest part of the process, it is the most important and not always as smooth as you may think. Between checks getting lost in the mail or funds not available, can become a monthly problem. dealing with rent collection
In a perfect world, you would receive all of your checks by the first of the month. In a realistic world, you have multiple tenants each paying their portion of the rent at separate times of the month. Thus, you need to have a plan of attack. If you push too hard to collect the check by the first, your tenant may start to resent it and instead of trying harder to pay by the first they will wait a day or two longer out of sheer spite. Even if they send the check on time with the lag time to receive the mail coupled with the weekend and any hold times for out of state renters, you could be looking easily at not cashing the check until the 7th of the month.
If you don’t want to have to wait for the mailman every month, you do have a few other options. The first is to set up a scheduled time every month where you can pick up the check or checks. This may work if the house is on your way home from work or in your neighborhood, but if you are 20+ miles away you may not want to make that trip every month. Plus you will find that in spite of your advance emails and text messages, there will be one tenant that does not have their check when you ask them to and you will have to make the trip again or ask them to mail it leaving you right where you started.
The other option is to have your tenant direct deposit their portion into your account. Many people don’t feel comfortable giving their tenants their account information or having access to their account. The odds are they can’t hack in or do anything negative of any consequence, but because we live in a time where fraud is rampant, they look for a better alternative. That alternative may be to strictly enforce a fee for every check received after the fifth of the month. While you would have every right enforcing this, you could run into trouble if the tenant claims the check was sent and gets lost in the mail. Dealing with late rent checks is a hassle, but if you push your tenant to the point that they stop paying, you would have bigger issues, like eviction, to worry about.
How you collect your rent and how you react when a tenant is a few days late is critical to your renting success. If you don’t have money coming in, it changes everything about your rental business.