Not only does a landlord not receive rent, but she also runs the risk of having to pay expensive legal fees for an eviction. It’s a lose-lose situation: lose your hard-earned money and lose your patience too. To help you out, HouseME has put together some advice on how to tackle late or missed payments.
Various tactics are at your disposal – some work better than others
Many tactics are available to landlords to ensure a defaulting tenant pays up. You could send carrier pigeons with politely written notes neatly tied around their ankles. Smoke signals might work for others, especially if you attempt them in your tenant’s living room. You could always start shopping at your tenant’s grocery store, making comments about any luxury items they place in their trolley. Or perhaps you might choose to move into the apartment next door and take up the bagpipes, placing particular emphasis on the fact that you are a slow learner. Regardless of what you do, it’s going to cost you time and money. Bagpipes are expensive after all.
That said, there are some steps that can help mitigate your risk. For DIY landlords we recommend 3 focus areas:
1.Vetting is vital
Preventing non-payment starts before day one of the lease agreement. Make sure that your tenant has a regular income after tax (and after other major deductions) that is about three times the value of the rent. Take the time to get a comprehensive credit report which details the applicant’s monthly commitments and, most importantly, whether or not the tenant is in arrears. If the applicant is already defaulting on a short-term loan, it is vital that you know, and even more important that you do not offer a lease agreement.
2. Communication is critical
Unfortunately vetting is never fool-proof and sometimes even the best of tenants can fall into arrears. As soon as this happens, communication becomes critical. Immediately after a payment is missed it is important to communicate with the tenant both in writing and over the phone. Written texts keep a trail and verbal communication shows the tenant that you are serious. Even if the tenant gives you a date by which they will pay, insist on having regular check-ins to find out if the target date of payment will still be achieved.
3. Learn the laws
The law is like a chainsaw: if you know how to use it, you can bring down the mightiest of trees. If you do not, it can cost you an arm and a leg. Make sure you know the legal steps at your disposal. For example, it is imperative that you issue a Letter of Demand that is compliant with the law and places the necessary next steps at your disposal to lawfully cancel the lease if payment is not made. Furthermore, because a Letter of Demand requires you to wait 20 business days before you can lawfully cancel the lease, it is important to issue a legal letter very soon after a tenant has defaulted, even if they have given a commitment to pay at a later date. It is no good having to wait 20 business days from an already delayed payment date. Rather have the clock start ticking as soon as you can.
HouseME is in the business of selling peace-of-mind
Another option is to save yourself a lot of trouble and get HouseME to look after your investment property for you. At HouseME we pride ourselves on excellent collection rates. HouseME tenants are amongst the best in the country. Not because we train HouseME staff in effective smoke signals, or ineffective bagpipe playing, but because we place extra emphasis on our vetting process. Our team believes in preventing defaulting tenants long before they take over keys to your property rather than reactive actions, such as carrier pigeons.
In June and July this year HouseME averaged a 99% rental collection rate after 30 days for tenants on our Rental Guarantee. Plus, any late payments on the Rental Guarantee were HouseME’s problem, not the landlord’s.
Rent that is guaranteed
If the HouseME vetting team ever makes a mistake, we offer a Rental Guarantee to bridge missed payments, giving us enough time to find a new tenant. As a landlord, you get paid by the same day of the month whether your tenant has paid or not. In fact, you only find out that your tenant has defaulted after your rental income has hit your bank account. And then HouseME manages the arrears for you by following up with emails, WhatsApps and calls. Within a week after default, HouseME will issue a Letter of Demand from their attorney, ensuring the necessary legal tools at your disposal are put into action.
Ultimately, HouseME employees come into work every day to sell peace-of-mind and return maximization for landlords. And at just 2.5% for our renting essentials, plus 1% for our Rental Guarantee, it’s a no brainer to buy HouseME peace-of-mind.
Plus, if you already have a tenant, you can transfer onto HouseME’s collections and payments system at any point in the lease, and get a Rental Guarantee for just 1% if your tenant passes vetting.
To Discover the New, Smart Way To Rent with HouseME, Click Here.