Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I've got quick video on some strategies that will help you avoid the headaches of late payments.
If you have ever been a landlord, or plan to be, one of the biggest headaches is collecting rent on time. My motto is, if I have to pay the mortgage on time every month, you better believe my tenants are going to pay on-time, every month.
Collecting Basic Real Estate Rent:
– Rental application – Due diligence – credit checks, etcs…
– Set very clear expectations – (Text Only)
•Exactly how much is due
•What is included in the amount (such as utilities or other services)
•What period of time does the payment represent
•Who a check should be addressed to
•When rent is due
•Where the payment should be made, or how it will be collected
•The exact mailing address if payments are to be mailed
•Instructions on lost checks
•What to do if the payment can't be made
•What the penalties are if the payment is made late, and how they will be collected
•What happens if a check is returned by your bank
– Emphasize the late fee/penalties – Dollar/late day
– Clarity payment type
– Pre-Printed Deposit Slips
– Money Order
– Cash
– Credit/Debit Card (2-3% transaction fee) – online rent management program
– AVOID – personal Checks
– Keep everything in writing – signed by tenant – important for court
– Collect ONE check – multi-family, students, etc…
– Last resort – management agencies
Late Real Estate Rent Payment
– Immediately send notification letter – include date
– Include information about penalty – fee if not paid
– Certify mail for records
– Send multiple notices (3) – until you get a response
– No arguments, verbal fights, or threats – bite you in the butt
– State Laws for Eviction – vary by state, guidelines, time periods, “Notice to Quit”
– Start Eviction Proceedings
Collecting Rent After Move-Out
– Can you sue in small claims court – Yes
– Can you win – Yes
– Can you collect – Probably not – its what's called “chasing bad money”
– Just be thankful – mark it as a loss and move on
– Section 8 – vouchers can be taken away or put on hold till overdue balance is resolved
In the real estate rental game, flexibility is key. Every tenant will have their own story. It's important you identify who your good tenants are, and who your bad tenants are. Trust me when I say you'll know the difference when that time comes. As long as you set clear expectations, maintain constant communication, and perform the necessary due diligence, you can expect to have Tenants that will pay on-time.
Again, this is Frank Chen with REIClub.com. Please take the time to leave your comments for this video below and please subscribe to our YouTube channel so you'll be automatically notified when we upload more quick video tips for you. Take care and good investing.
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