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Fill. Collect. Maintain.

Can property management be that simple?

On paper property management is so simple. Fill vacancies, collect rent, maintain the property. That’s it.

If it really is that simple, why do so many investors struggle with management?

Reason 1investors don’t have a system in place
Reason 2: investors believe doing these things quickly matters more than doing them well

This is part II of our series on how to do the three kings of real estate… and do them well.

Clarity and Consistency
As the landlord it’s your job to lead with clarity and consistency to get results you want: great tenants who pay rent.
Clear Deadlines
You’d be surprised how many tenants think they can pay their pet fee and/or utility fee late as long as rent is paid on time. Make sure your tenant knows what is owed and when. Make sure your tenant knows the deadlines by outlining them in your lease and reviewing them at the time of signing.
  • when rent is due
  • when rent is late
  • when an eviction will begin
  • when late fees are charged
  • order of payment (I.E. if a tenant is charged for a repair, does that have to be paid before rent is paid?)
  • payment methods – Do you allow tenants to mail rent? If so, can they mail it on the last date it is due, or do you require payment to be in hand by the due date if they want to avoid a late fee?

Consistent Consequences
Generally speaking, we don’t encourage making exceptions to protocol. It creates confusion and frustration. But sometimes shit happens and an exception needs to be made.

  • Charge late fees on the same date, every month.
  • Be consistent and fair in how you handle tenant chargebacks for damages and repairs.
  • If you allow an exception: make sure it’s clear that it’s an exception, outline a new deadline, and affirm the consequences if the new deadline is not met.
Proactive and Frequent Communication

Should tenants remember to pay rent? Yep.
Do they? Nope.

Start out on a strong foot by setting expectations at the lease signing appointment. Reviewing the terms of the lease before the tenant move-in prevents misunderstandings.

It’s not enough to set initial expectations with the tenant. You should also create a system to remind tenants what is due, when it is due, and what the consequences are if they don’t pay (then automate it with technology).

Some people feel uncomfortable following up with their tenants for rent. They don’t want to be “annoying bill collectors.” If there is a process you follow every month, with every tenant, rent collection becomes less personal. Plus, the consistency goes a long way in court if you have to file an eviction.

  • Send rent reminders on the last day of the month, the 1st, 2nd, and 3rd of the month via text and/or email
  • Send a rent reminder + a reminder today is the last day to pay rent and avoid a late fee on the 4th of the month.
  • Send a reminder a late fee has been applied on the 5th of the month.
Do I evict?
Generally, if payment isn’t being made, it’s time to evict.
But, not always. 

Most landlords approach rent collection (and evictions) one of two ways. Some landlords see the lease as a document which should be strictly adhered to at all times. Other landlords see the lease as a tool to accomplish a bigger goal: make money. Both approaches can be successful.

There are intangibles that impact decision making as an investor. If a tenant falls behind and is asking for a grace period, how do you know when you should work with them and when you shouldn’t?

Proactive or Reactive Communication
Is the tenant communicating proactively or waiting until the last minute? Did your tenant reach out before rent was due to let you know they had an unexpected expense and rent might be late? Or did they dodge your calls and texts for a week, and finally reach out to you when they got a Notice to Pay or Quit with a laundry list of excuses?

Payment History
Do they have a strong history of making payments on time? If so, it might be worth working with them.

Can they commit to a new payment deadline? When a tenant says “I will be 5 days late paying rent” you have a higher chance of collecting rent than if a tenant says “I will be late paying rent, I’ll get it to you ASAP.”

Type of Money Owed
Is the tenant behind on their rent? Or are they behind because a repair was charged to them and they aren’t prepared to pay for it all at once? Rent is a set expense that can be planned for, because of that it gets less leniency than unexpected expenses.

Payment Plans
One of the common questions we get is “can we set the tenant up on a payment plan?”

Ultimately, that’s up to you. It’s okay to work with your tenant for a period of time. Just be sure to set clear expectations around what is due, when it is due, and consequences for missing payment again. Also, understand there’s always a risk that you may end up having to evict anyway.

A Note For New Investors
If you’re just starting out, we suggest being more firm than lenient. As a rule, rent is due on the first and it is late on the 5th. If you have already outlined the expectations and the consequences, be consistent in enforcing them. As you get more experience, you’ll have a better feel for when you can bend the rules.

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