Did you know that there were more than 44 million households that rented in the U.S. in 2019? With the rising costs and risks associated with home ownership, more people are turning to rentals. Renting has several advantages over buying, including that you don't need to make a large down payment and that household repairs are handled by the landlord.
One of the most important duties of a landlord is rent collection. While most tenants pay on time, there are some who stall or are consistently delinquent; there are still proper ways to handle these situations. Read on to learn about four major mistakes in the rental collection process.
What Is Rent Collection and How Has It Evolved?
The method by which tenants pay for rent has evolved from writing checks to paying online via banking accounts and credit cards. Without face-to-face collection, there could be fewer altercations. Online methods are especially easier given the higher dollar amounts as rents across the country increase.
In some areas, rent has risen due to people forgoing home ownership and rising populations. For example, Tampa, Florida, has seen rent increase by more than 28 percent over the past year. Increases like that make real estate investing a gamble with significant payoffs.
4 Rent Collection Mistakes Landlords Should Avoid
No matter how frustrating the rent collection process gets, there are certain actions that landlords should never take. 4 common mistakes include:
1. Constructive Evictions
Sometimes an eviction is necessary, but there are proper ways to carry one out. Constructive evictions are when a landlord takes action to limit the viability of living in a unit. These actions include:
- Changing locks
- Removing appliances and essential items like sinks and toilets
- Shutting off utilities
- Not providing essential maintenance
These practices are not only unethical, but they are also illegal. Penalties range by jurisdiction but include fines and possible suspension of licensure.
2. Partial Payments
While accepting a partial payment may sound like compassionate property management, it is often problematic. Even if it is intended to be a one-time occurrence, word can spread amongst tenants, and late payments with the promise of partial payments could increase. Landlords who accept partial payments should still impose late fees on the remaining payment.
3. Poor Record Keeping
Keeping records of tenants who are late with payments is basic common sense. First, having a record of late payments may leverage a tenant to pay up since landlords may report them to a credit agency. The other major benefit is that if legal action is required, you have evidence.
4. Not Getting Professional Assistance
Typically in the form of legal counsel, professional help should always be sought with late rent collection. This provides landlords with protection from any legal missteps.
There are other professionals that you may seek out, some of which can spot a bad tenant before a lease is signed. These services include tenant screening and property management.
Do You Feel Prepared For Rent Collection?
Now that you know four common rent collection mistakes to avoid, what are you waiting for? With increasing rents, collecting payments on time is essential. Avoiding common mistakes can save you headaches and money.
If you're looking for rent collection and other property management help in the Tampa area, contact us for all your needs.