Rent payments are cash flow. Any interruption of that income stream could have dire consequences. The good news is, you can take some simple steps to protect yourself.
- Always include a clause in your rental agreement clearly noting the monetary penalty amount applied if rent is not paid by the noted due date;
- Always apply late fee charges (as noted in the rental agreement) to all tenants whenever late payments occur, regardless of the reason, in order to avoid potential discrimination charges;
- Advise prospective tenants of the late fee penalty prior to their signing of the lease;
- Remind your tenants of the rental due date 3 or 4 days prior (via email or phone message) for the first few months after they move in.
In addition, make sure your tenants understand that monthly rental payments are due until they move out; that is, the initial security deposit should neverbe applied in lieu of a rent payment. Allowing tenants to apply all or a portion of their security deposit to their final month’s rent results in lowering how much you can potentially collect for property damages which can only be accurately noted after the tenant move-out date. In addition, decreasing the security deposit amount that the tenant can receive back decreases his/her incentive to leave your property in tip-top condition.