Sometimes it feels like a futile struggle to get tenants to pay on time. Your property manager can send reminder after reminder in every way they can think of, from the spoken word, written note, email, text, tweet to smoke signals and semaphore...sometimes nothing seems to work!
When the rent payments come in late, it can be a real inconvenience to real estate investors — particularly those who own single-family properties. At the same time, high turnover rates can be a killer for a real estate investor. Both of these issues can easily be overcome with a few simple steps and "re-evaluation" of the owner/landlord/management/tenant relationship.
I know many of our readers are aware of our reputation as a management company. Three cities, 2700+ properties, a full team handling day to day issues and a heavy belief in basic business principles. We run our management companies much the same as any entrepreneur may run a typical fast growing company. Sometimes, it is hard to really gauge and understand if we are successfully accomplishing our mission. Let me share one quick number from October that really points to our success rate.
In the month of October there were 68 leases up for expiration. Of those 68 leases, our team was able to sign 44 to a lease extension. A vast majority of those 44 were signed to a 2-year extension. That is a full 65% of our tenants who choose to stay in their property. When tenants stay in a property that means they are happy and satisfied with what they are receiving and happy tenants make for happy owners.
It is within the power of real estate investors and even property management companies to take steps to ensure that tenants who are not facing financial troubles remember to make their payments on time. While it’s always possible to put penalties in place for late payments, negative reinforcement isn’t always the best solution to the problem. That’s why we’re looking at a more positive approach.
4 Strategies to Encourage Tenants to Pay on Time
Pay Mind to Maintenance
Why should a tenant feel inclined to pay for a home that’s falling apart around them? Ensuring that maintenance is taken care of — which usually begins with your having access to excellent services and hiring an excellent property manager — means that tenants won’t be able to begrudge paying their rent. More than keeping up with maintenance, you should have a plan for improvements, too. No property gets better over time and your tenants know it.
You should be able to rest easy knowing that if a maintenance issue comes up, it can be handled swiftly, efficiently and professionally.
Honor Landlord Responsibilities
Is your property manager treating your tenants well? When you hire a property manager, it’s important to know that they value to the customer service aspect of their position in addition to being well-organized and informed. A property manager who is sloppy with record keeping or rude to tenants is not going to encourage anyone to pay their dues. You never want tenants to resent your property or your property manager. If there are issues cropping up with the quality of service from your property manager, you may need to reassess...and find someone who will do their job well.
It’s all well and good to address maintenance concerns quickly and have an organized property manager, but they’re nothing without clear communication. Communication is key in real estate investment. Not only should tenant concerns be addressed, but they should be assured that they’re being taken care of and kept informed. Face-to-face conversations between your property manager and your tenants are important! Building a good rapport is invaluable to keeping good tenants and keeping them inclined to pay on time.
4. Be Great At Follow-UP
One of the key changes we made in our property management company was bringing in Team members whose only job was to contact tenants who call in maintenance issues. We call to confirm the maintenance needed. We call to confirm the maintenance was done and ask the tenant if they were satisfied. This follow-up is key to the relationship and trust for the tenant.
Do not be afraid as a landlord (and as an investor demand this from your management company) to reach out and build a relationship with your tenant. That will lead to such a great relationship and a long-term, happy tenant.
Do you have other positive strategies for handling tenants? We would love for you to share them with all of the readers. At the same time, we have many different collateral pieces to help investors deal with issues when investing in real estate. We have recorded a video titled "11 Mistakes To Avoid In Real Estate Investing". Would love your feedback on the video as well!
Real estate investing and managing property are not as hard as they are often made out to be. You just need to exercise good judgment and have a little empathy for others. Both of those will serve you greatly as an investor and go a long way toward your success and happiness.