Rental property management often revolves around cash flow. You need regular rent payments so you can stay current with your expenses like mortgages, insurance, and maintenance. What is your strategy to keep tenants paying promptly?
Encourage Timeliness With Late Fees
Industry professionals www.rentrescue.com/ suggest charging a late fee for rent to encourage tenants to keep up. A few factors you should examine are:
- Establish when rent is considered overdue. Will you allow a grace period? Are there good faith scenarios in which you might waive the charge?
- Decide the amount of the late fee. Typically, it is set proportionally to the rent total. Check your state’s leasing laws as some have caps on how much you can charge.
- Decide if you are willing to negotiate partial payments. If so, will you still hold tenants responsible for the late fee?
It is generally wise to make these choices before implementing the policy. Apply it consistently so your tenants know what to expect.
Insure to Protect Your Cash Flow
There may be instances when a late fee isn’t sufficient to keep a tenant from failing to pay entirely. It may be wise to shop now for a rent default insurance policy. These plans could aid the recovery of lost income if an eviction is necessary.
Keeping your cash flow stable is all about preparation. Strategies to keep tenants paying on time and insuring as a backup plan can help keep you ahead in the rental real estate game.