How to Make Sure You Receive Your Rent
As a landlord, the most (monetarily) important thing that you do is collect your rent. That’s all well and good, but there’s a lot more to it than that. Selecting tenants that are able to pay your rent and having collection options available for those tenants goes a long way.
A good rule of thumb to consider is that your tenants should make 3 times your rent amount after taxes. This can be verified with pay stubs or a copy of last year’s tax return, if your prospective tenant is self-employed. Also pay attention to how your tenants pay first/last/security – was the money readily available? Was the check in their name? There may be some red flags if your tenants express some concern about the timing of the deposit, or the check is in the name of a friend or family member.
We can’t stress enough the importance of keeping good records. The easiest way to keep track of rent, for the smaller time landlord, is the rent roll. In this example, you can see that Mr. Smith pays his rent within the grace period, with the exception of the fee applied once. All the information is readily available at a glance. Any spreadsheet software will work, such as Microsoft Excel or Apache OpenOffice.
In recent days, the collection of rent has taken on a whole new process. In years before, rent was paid with check, money order or cash. There are many other options today that offer the convenience of digital payment and an instant receipt. Some landlords accept PayPal; however, be wary of any fees that may be incurred. There may be a charge of 2.9% to receive your rent. There are many online collection services that allow for automatic fee assessment and direct debit of rent from a tenant’s checking account – try eRentPayment or PayYourRent.com.
Finding the tenants and keeping them is one challenge, collecting your rent is another. Being a landlord may not be simple, but it can have many rewards. Happy Investing!