It’s hard to turn a profit with no income.
Understand what you can do about late rent payments.
It’s no secret that rental properties can be a great source of passive income…that is, as long as there is income.
Late rent payments are the bane of every landlord’s existence. They cut into your profits, throw off your bookkeeping, and worry you to no end.
But anything worth doing (like paying rent) is worth doing right. In this article, you’ll learn how to prevent and deal with late rent on your Florida investment properties so you can continue enjoying that passive income for years to come.
How to Avoid Late Rent Payments
If you’re just starting out as a landlord, bravo for finding yourself here! Considering all potential hiccups before you actually encounter them will make this next part of your life a lot easier.
And if you’re currently dealing with a late rent payer, these tips should help prevent you from finding yourself in this situation again.
Detailed Lease Agreement
The tone of your landlord-tenant relationship is determined, in many ways, by the lease agreement. The section of the lease that deals with rent should be as detailed as possible to avoid any confusion.
Make sure the lease includes:
- Amount of rent
- When rent is due (as well as what happens when the due date falls on a weekend or federal holiday)
- Method of payment (by mail, in person, online, etc.)
- How to pay (cash, check, electronic transfer, etc.)
- When late fees are assessed
- Amount of late fees
- Whether there is a fee for bounced checks and, if so, how much
Background Screening
Background checks are one of the most effective ways to determine whether a potential tenant is reliable and responsible. Verifying their employment status, rental history, and credit score can give you a better idea of what to expect from them.
At American Home Team Realty, our tenant screenings include employment, rental history, criminal/credit checks, and reports from character witnesses.
Overcommunicate
“But I didn’t know!” is one of the most irritating things to hear as a landlord dealing with late rent.
Avoid any future misunderstandings by carefully explaining all aspects of the lease with your new tenants, especially when rent is considered late and how late fees are assessed. Keep in mind that, according to Florida law, if not mentioned in the lease, you may not charge late fees.
Once your tenant has moved in, it may be helpful to send reminders that rent is due, either by email or text.
Online Payments
With the rise of apps like Venmo and PayPal, few people even have a checkbook nowadays. Make it easy for tenants to pay the rent by providing the option to pay rent online. (Bonus points if they can schedule automatic payments!)
Insurance Coverage
While it’s imperative to have a safety net, you can’t always ensure that your tenants will pay rent on time, every time.
With rent guarantee insurance, you’ll be covered in the event one of your tenants defaults on their rent.
This is different from rent loss insurance, which only covers instances where your property is unlivable due to damage or necessary maintenance.
Property manager
You can’t call it “passive income” if you’re doing all the work!
With a property manager, you’ll never have to worry about when rent is due; you’ll have a dedicated professional to handle everything from tenant screening and rent collection to maintenance requests and bookkeeping.
Our clients swear by the freedom that comes with having a property management team!
How to Handle Late Rent
Of course, some tenants will let the due date pass without a blink of recognition no matter how well you’ve prepared.
If this does happen, it’s important to stand firm and abide by the terms laid out in the lease. It’s hard to hold your tenants accountable when you’re breaking your own rules.
1. Double check that rent is actually due.
If you have multiple properties (or just a lot on your mind!), it can be easy to get due dates confused. Hey, we’ve all been there!
Double check your records to make sure that your tenant is actually late on rent before proceeding.
2. Give the tenant a call.
Once you notice that rent is late, call the tenant directly to make sure they’re aware of the situation. A phone call is less formal than a written notice and gives your tenant the chance to rectify the issue without making you look like the bad guy.
In some cases, this may be all that’s needed to get things back on track.
3. Send a late rent notice.
If the rent is still unpaid and/or you can’t reach the tenant by phone, your next step should be to send a written late rent notice.
This doesn’t have to be long or complicated; Florida Statute 83.56(3) provides the following sample text:
You are hereby notified that you are indebted to me in the sum of _________ dollars for the rent and use of the premises (address of leased premises, including county), Florida, now occupied by you and that I demand payment of the rent or possession of the premises within 3 days (excluding Saturday, Sunday, and legal holidays) from the date of delivery of this notice, to wit: on or before the ___ day of ____ , ____ (year)
(landlord’s name, address and phone number)
4. Document all communication.
Once you have sent the written notice, file a copy for your records. Keep documentation of all communications between you and the tenant.
These records will come in handy in the event of a legal battle.
5. Start the eviction process.
After three days of non-payment, landlords are legally allowed to terminate the rental agreement. Evicting a tenant can be a long, difficult process, however, so it’s important that you exhaust all options before resorting to eviction.
If you have a property manager (and you should!), they can handle this matter for you. Otherwise, you will need to contact an attorney to assist you.
Conclusion
Late rent is something no landlord wants to deal with and American Home Team Realty believes you shouldn’t have to!
Our complete property management services are hands-off and affordable, ensuring that you can enjoy a source of income that is passive in every sense of the word.
At American Home Team Realty, we’re not happy unless you’re happy! Contact us today to see how we can help.
