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3 Tips For Collecting Past-Due Rent From Your Tenants

If you're a landlord and have ever had to evict a tenant, you probably realize what a hassle this is. Not only does it take time, but it also requires following the correct steps and procedures for evictions. If you want to avoid this, you might be able to try successfully collect the rent money you are owed by following these tips.

Send A Demand Letter

The first step you should take when a tenant falls behind on rent is send a demand letter. You may want to call the tenant the day after the rent payment is due simply to remind him or her, but if you do not hear anything back, you could prepare a demand letter to send.

The demand letter should:

  • Clearly state the purpose of the letter, which is to collect rent
  • Restate the terms of the lease, as well as the consequences for failing to abide by it
  • Include the amount of the late fee
  • Give the tenant until a certain date to pay the amount in full

The demand letter should not:

  • Threaten the tenant
  • Be insulting to the tenant
  • Be demeaning or include vulgar words

Sending the letter through certified mail is a good route to take as well, because it ensures the tenant received it. A lot of times, people will pay their rent after receiving a letter like this. They know you are serious about collecting the debt, and they realize you will take further action if you do not receive the money.

Work Out A Payment Plan

Another option you could take is to work out a payment plan with the tenant. If the tenant immediately calls you and explains that he or she is going through a tremendous hardship right now, you might be able to work out an arrangement with the tenant. This option is not a good idea if you feel like the person is trustworthy, and you might be able to base this on past experience. For example, if the person has lived there for years and has always paid his or her rent on time, you might want to give this option a try.

An idea for a repayment plan is to divide the past due rent up into three to six payments. You can then add this amount to the next three to six payments, and this would catch him or her up on rent if the tenant follows through with it.

Set Up An Automatic Payment System

An automatic payment system is a good thing to have as a landlord. This is the type of system that would allow your tenants to sign up to have their rent paid automatically each month. This system would be beneficial for tenants that are past-due on their rent, and for your tenants that are current.

When tenants are behind on their rent and want to remain living there, you could make this a requirement. After discussing the issue with the tenant, you could tell him or her that you are willing to give a second chance; however, the person must sign up for automatic payments.

While this method is not fool-proof, it can make a difference. When payments automatically come out of a person's account, the person might be more likely to make sure the money is there. If the money is not there, the person will incur fees with you and with the bank he or she deals with.

If these methods do not help you collect the money your tenants owe, you could always hire a company that offers eviction services. These companies specialize in evicting tenants for landlords, and they know the process. For a fee, you can have someone else handle all your evictions for you. To learn more, contact a company that offers eviction services in your area.