As of early 2023, renters in the United States continued to owe nearly $11 billion in rental debt.
Tenants behind on rental payments risk losing their homes but also put property owners and landlords at risk. Late and missed rental payments equate to lost income for investors.
Collecting rent from delinquent tenants isn't easy, but this rent collection guide can help. Keep reading to get started.
Tenants Haven't Paid Rent: What to Do Next
If your tenants haven't paid rent, what are the first steps you need to take?
Start by approaching the tenant about why they haven't paid rent. Let them know that you are sympathetic to their situation but also have your own financial obligations that depend on their rent payments.
Set up a meeting to discuss the options that you can provide delinquent tenants with to help them pay off rent debt.
Rent Collection Options to Offer Tenants
During the meeting with your tenant, discuss options you can offer them to repay rent. Choosing the right option is not always easy, as options range from demanding rent to forgiving a rent payment.
Learning about these options can help you decide which method is right for you.
Demand Rent
When tenants continuously fail to pay rent on time, you can demand their rent in full. This won't work with tenants who can't afford the rent, but works with tenants who have the financial ability.
This tactic works best on tenants who can pay and are trying to take advantage of the situation. Late fees and pressure can't make tenants pay who simply don't have the funds.
Reduce or Defer Rent
You can respond to delinquent tenants by reducing or deferring their rent payments for a limited amount of time
Consider offering good tenants going through financial hardships these options. Rent reduction and deferred payments can help you retain good tenants and allow you to keep generating some income.
Deferring rent won't help cash flow in the short term, but you won't lose revenue during the lease timeline if your tenant repays the rent owed with a higher monthly rent or a one-time payment when they are financially able.
If you have property managers, they can talk to you in detail about these options before offering them to a tenant.
Forgive Rent
This is not an ideal option for landlords, but it can be less time-consuming than tracking down rent. Or, if you don't have time to handle delinquent tenants, you can hire a property management company that can.
You and a delinquent tenant can come to an agreement on rent forgiveness. You could choose to forgive past rent as long as they stay current on future rent. If they continue to miss payments, you can demand the rent you forgave.
This is the last resort method of rent collection unless you choose to go through the tenant eviction process.
Hiring Property Management Companies
Hiring property management companies is the best way to handle delinquent tenants and follow rent collection best practices.
Not only will professional property managers collect rent for you, but they will also manage tenant relations, track down delinquent tenants, and handle the eviction process, if necessary.
Don't wait any longer to go without a professional property manager. Contact us now to learn what we can do for you.
