Ideas for Getting a Tenant to Pay Rent on Time

I worked on and off as a Landlord and property manager for many years. In addition to that, I have owned my own rental properties until fairly recently. During that time, the biggest problem I ever encountered was getting tenants to pay rent on time. They failed to realize that we actually counted on rent money to pay the mortgage, and that meant that we needed it by the 5th of the month at the latest, as the mortgage company could start calling on as early as the 2nd and late fees start accruing on the mortgage around the 15th.

Early payment discount to get tenants to pay rent early: My best paying tenants took advantage of my early payment discount. This 5% discount ($50 for $1000 rent) will make your more frugal tenants pay the rent on time. In order to do this, you must make sure you set the rent at a price where you can afford to set the discount. For example, if the mortgage and average maintenance adds up to 1200 a month, then you should charge a rent of at least 1400 (depending on how much profit you need each month and what the market allows). The early payment amount would be $1330. No smart tenant is going to risk having to pay an extra $70.00 by not paying rent early if they can help it. To take advantage of the early payment discount, the tenant would need to pay rent on or before the first of the month. Finally, be sure that you set rent in the lease at the full price not the discounted price, so it will be clear that the discount is an award that that paying the full rent is not a penalty.

Enforce Late Fees to get tenants to pay rent on time: When and if tenants have missed the early payment date and have lost the early payment award money, they may lose their sense of urgency to pay the rent, choosing to do so when they get around to it. Keep that sense of urgency to pay rent on time by charging a late fee. In most states, you cannot charge a late fee until the 5th of the month (check the laws of your state). So start the late fee penalty on the day after the law allows and have it accrue every day. Don't get carried away with the late fee amount because if it is excessive, they tenant can take you to court. In a months time, it should not accrue to more than the late fee you would be charged by your bank for paying late. So if you are charged $28.00 for paying your mortgage late, you can charge the tenant $5.00 for paying after the 5th, and an additional $1.00 every day thereafter with a maximum of $28.00 late fees per month.

Send a monthly reminder to get tenant to pay rent on time: Gentle reminders every month gives the tenants a chance to remember that rent day is coming around that that you would rather give them the early payment award than to charge the late fee. It lets you know that you are on their side and that paying rent early or on time, helps you to take care of the mortgage and maintenance on the home.

Accept payments online to get tenant to pay rent on time: Sometimes having online paying options makes it easier for tenants to pay rent online. Consider setting up a PayPal account or a way to accept debit cards online or over the phone. Consider offering tenants an automatic debit option for paying their rent.

Take care of your tenants needs to get them to pay rent on time: An angry tenant can easily turn into a tenant that pays rent late. Make sure the house is in good repair and do not excessively disturb the tenant and everyone will be happy.