Rent collection is one of the most important activities of a landlord. Without collecting rent your investment property is not generating the funds needed to pay your monthly obligations. Monthly expenses such as the mortgage, insurance, property taxes, association due, etc. must be paid each month or the landlord will fall behind and possibly go into default.

Rent is normally due on the 1st day of the month. Many landlords offer a grace period of 3 to 5 days. The grace period extends the date rent is due before a penalty is assessed. Most tenants pay their rent on time to avoid these penalties. Sometimes tenants do not pay their rent on time for various reasons, and the landlord must take action. The date rent is due, the length of the grace period and the penalty if late should be clearly noted in your written lease agreement. It is important that you assess all penalties when the rent is late otherwise it will continue to be late.

If the landlord does not received rent by the end of the grace period, the landlord should try and contact the tenant to find out why rent has not been paid. Many times by contacting the tenant the non-payment issue is immediately resolved. If the landlord gets no response from the tenant the landlord must start the eviction process by delivering a 3-day notice.

Collecting delinquent rents can be a difficult and discouraging chore. Allowing a tenant to get away without paying is even worse. Once a tenant has skipped out or been evicted for back rent, the landlord must take the extra step and aggressively pursue the tenant. Not only are the tenants essentially stealing from the landlord but if the landlord let it go, they will go on and cheat and steal from other landlords. We are all in this together and need to keep each other informed of bad tenants. Reporting to the Tenant Registry and the major credit bureaus puts all of us on notice that a bad tenant is out there and we should not rent to them.

There are online collection services that will take a landlords past due rent accounts on a flat fee or contingency fee basis. The flat fee basis is very inexpensive and completely automated. The contingency fee based method is more aggressive and open-ended. Either method is effective and ultimately brings the money back to where it belongs…the landlord’s bottom line!

In today’s uncertain economy landlords can not afford to lose money and let tenants get away with living in a property for free. If you need help with collecting rent or starting the eviction process please consult with your local property management company.

Kent Forsythe, Licensed California Broker
Member of California Assoc. of Realtors, National Assoc. of Realtors, Owner of Superior Property Management. Contact Kent @ kforsythe@superiorpropmgmt.com