Learning how to collect unpaid rent from tenants is one of the key issues faced by landlords and property managers on a regular basis. Often tenants will pay a portion of their rent, or string landlords along with promises of imminent payment. Understanding and clearly communicating a number of key policies to tenants is the best way to manage the process of how to collect unpaid rent from tenants.
Seasoned real estate investors will confirm that knowing how to collect unpaid rent from tenants is one of the key skills necessary for success as a landlord or property manager. Failure to pay rent is a problem stretching back to the very first rental agreement, and it is unlikely to go away anytime soon.
In addition, the image of the unscrupulous landlord exploiting the weak and helpless tenant is etched in our collective psyche, making it even more difficult for landlords to know how to collect unpaid rent from tenants, what their rights are, and how to create a system that works for everyone involved.
To be sure, some landlords take their knowledge of how to collect unpaid rent from tenants too far. However, the vast majority of landlords simply wish to conduct a decent, profitable business that provides shelter, a much needed service by human beings everywhere around the world. As such, landlords who know how to collect unpaid rent from tenants in an efficient manner stand a much greater chance of remaining in business for decades and even generations in the future.
The first step in gaining this knowledge is to recognize the need to follow a precise legal process. If a tenant fails to pay rent, the landlord must move into “robot mode.” Following a system helps ensure that rent will be collected before too much time elapses. Promises of impending windfalls are nice, but, as the saying goes, promises don’t pay the rent. Money pays the rent.
Landlords who know how to collect unpaid rent from tenants usually start with a document known as an Urgent Late Notice. This notice should be delivered at the end of whatever grace period has been determined. Tenants should know which day of the month represents the end of the grace period before they sign the lease. If that date passes, the landlord or property manager should ensure that the notice arrives in a prompt fashion.
The late notice starts the process of how to collect unpaid rent from tenants. Once sent, it should prompt a response. If that response fails to come within a reasonable period, perhaps three to five business days, the landlord should follow up with a phone call. The call should be firm, friendly, and serious in tone. It should inform the tenant that failure to pay rent by a given date will result in the account automatically being handed to an attorney’s office.
Should the tenant still fail to respond or pay rent, the next step in knowing how to collect unpaid rent from tenants is to send an official eviction notice or attorney’s letter. The letter should include instructions to pay rent of quit the premises. It should also inform tenants that failure to pay in a timely fashion will be reported to appropriate credit-rating agencies.
If this step also fails to elicit payment, landlords or property management companies who know how to collect unpaid rent form tenants agree that the eviction process must move forward. At this stage, landlords should employ the services of a competent lawyer who has experience in eviction cases.
Going it alone, without the aid of an attorney, is a recipe for disaster.