Collecting rent from your tenants can come with challenges but by employing some proactive strategies you can make rent collection less of a source of stress. These are the 5 ways you can guarantee that your tenants will pay their rent every month:
- I rely on a 3x Net Rent Rule to help ensure that paying the rent won’t be a problem for the tenant in question. As an example, if I’m renting out a house for $2,000, the net income of the occupants needs to be three times that amount on a monthly basis, or $6,000. If this threshold isn’t met by a potential renter, I decline to rent the property to them.
- Go with your gut! Listen to your intuition, if something in the back of your mind is giving you the feeling that a potential tenant will be the kind to give you problems about paying the rent, turn them down. Especially as an experienced landlord, you’ll develop a sense for whether people will be the type to cause problems.
- Work with a rental agent. A good rental agent will be aware of all the available programs out there and help you get set up with good tenants. It’s in their best interest to make sure that they don’t place anyone in your properties that will give you a hard time about paying rent, and an experienced rental agent will also act as a filter when they can sense that someone will be the type to not pay.
- Background and credit checks are a great way to get an overall picture of someone’s financial health and see if they have any history of non-payment with their other debts. This won’t tell you everything you need to know about a potential new tenant, but it can help you avoid anyone with obvious red flags.
- Quarterly inspections. Every three months members of my property management team conduct full inspections of our properties. Not only does this help uncover any maintenance items that need to be taken care of, it also sends a positive message to the tenant: We care about the property, so they should also care about the property – good tenants will be happy to have a proactive landlord that takes care of the place that they’re renting, and happy tenants are far more likely to pay rent.
Issues can arise for even the best tenants due to extenuating circumstances, but by taking the steps outlined above you can steer clear of many potential problems and enjoy long-term, profitable relationships with your tenants to avoid having to sell your home fast in Long Island.