Cash flow is one of the most critical components of a successful property management business. There are a lot of expenses associated with managing properties, and you need to make sure that rental income is coming in steadily and on time if you are to remain profitable over time. So what happens when you have those few renters that always seem to send in their rental payment a few days late? How can you proactively reduce these occurrences from happening, thereby improving cash flow for your business? Here are a few helpful tips to get you started.
Create relationships
Let’s face it. It’s always harder to pay something late when it’s being paid to someone you know personally – unlike some faceless entity, like a credit card company. When you make a point to get to know your tenants and establish a friendly relationship with them, the rate of delinquent payments will most likely go down because they’ll feel a little guiltier about paying late.
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Provide plenty of options
People love options. They love choices. Giving your tenants multiple ways to pay can make it much easier for them, and subsequently reduce the number of late payments they submit. For instance, Suzy is so busy, she always forgets to buy stamps, so she tends to mail her rent late every month. If she had the option to pay online, she’d be much more likely to pay on time, or even a few days early.
Keep tenants happy
When you go out of your way to stay on top of maintenance requests and show your tenants that they are a priority to you, they appreciate it. By keeping your tenants happy, they’re much more motivated to abide by your rules and requirements, including paying their rent on time.
Incentivize
Like it or not, we live in a very “what’s in it for me” society. People like to feel rewarded for doing the right thing, so why not apply this concept to your tenants? If you want them to pay on time, give them incentives to do so. Offer a small percentage off the total rent for payments that are made early, or hold a monthly drawing for a gift card to a local store or restaurant for everyone who pays on time.
Have consequences
As difficult as it may be, there must be consequences to paying late and you should be holding your tenants responsible for these consequences. Implementing and enforcing a late fee, even if it’s just $10 more, can be enough to encourage your renters to comply by the rules and get their payments in on time every month. Chances are, if you have to enforce it once, there won’t be a second time.
If you’re going to stay on top of the market and continue to turn a profit, you must ensure that your cash flow remains positive. These simple, yet highly effective techniques just may be enough to nip late payments in the bud once and for all and keep your numbers right where they should be.
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Get your free copy of The Property Manager’s Guide to Proactive Management — And make the time necessary to plan for an extraordinary future.
