Passive Income Investors: How To Deal With Late Rent

It is statistically proven that once a homeowner is more than a few days late on their payment, it could be a sign of bigger issues to come. Of course, this is not an indictment on everyone and every late payment but if you are past the first of the month without your rent check, it should trigger an alarm. You don’t need to put your tenant on speed dial at 12:01 on the first, but you should closely monitor the situation. What can start out a few days late could quickly turn into a few weeks. The next thing you know, your tenant has missed a payment and will leave you searching for options. Having said that, the following will teach you to how to deal with tenants who are late with their rent checks.

The first thing you need to button up is the language and penalties cited in your lease. You should have penalties in place for every payment received after the 5th of the month and no later than the 10th. At the first sign of late payment, you need to contact your tenant and see what is going on. If you screened your tenant properly, this should be nothing more than a mix-up of dates on their end and a one-time deal. If not, you need to ask questions as to why they are late and get an idea if this will happen again in the future.

How you handle the first late check is critical. Your goal is not to act like a boss, but to keep the rent checks coming in. If you push too hard and threaten, you may lose your tenant and they may start to send the check in later and later just to spite you. Instead of threatening, try to find out the reason for the late payment. They may have needed to address a family medical emergency or deal with someone else on a short term basis. This doesn’t mean you have to let it slide and it is OK to be late, but if you exhibit some level of understanding your tenant will do everything possible to pay on time moving forward.

It is important to do whatever you say you are going to do. Empty proclamations will get you nowhere fast. If you say that there will be a penalty for every late check received moving forward, you have to enforce the penalty. If you tell them that you will give them to the 15th, you should not start calling them around the 8th to see if the check has been sent yet. Your tenant wants to know that you will be consistent in what you say and what you do. Of course, as the landlord you need to know that your check will be there every month, but there are different ways to go about that. This information can be gathered much easier and quicker by being civil and asking questions than to knock on the door demanding a check.

Not getting your rent on time can cause panic and may lead you to act out of character. Before you say or do things you regret, find out the source of the problem and if will continue.

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