What is the one thing every landlord checks each month without fail?
Yes – you got it – have tenants paid their rent on time!
If rent hasn’t arrived on time (or within your tolerance limits) it starts the process of asking “Why is it late?”, worrying whether it will be paid, stressing about a possible eviction, sleepless nights about negative cashflow and ultimately the worry of losing the property to the mortgage lender etc.
Let’s face it, our cashflow and the likelihood of us repaying our debts is directly linked to tenants paying us on time.
So how can we protect ourselves if times become hard for us?
Well, here are five ways to help avoid arrears building up on:
1. Get the Timing Right!
Make sure that your tenant always pays the rent on the day (or as close to as possible) that they get paid from their employer. It dramatically increases your chances of getting paid!
2. Getting the Method Right
Get all rents paid by standing order. The days of collecting cash or having cheques posted is really a thing of the past! No action is required by the tenant so again there is more chance of you getting paid on time.
3. When Cashflow is Good…
When tenants are paying on time and cashflow is good, make overpayments or put the money away for a rainy day. The worst thing you can do is spend it on luxuries.
4. Worried About Rising Interest Rates?
If ‘Yes’ then consider moving to a fixed rate, the ‘inevitable’ increase is going to happen but this will give you peace of mind!
5. Consider Rent Guarantees
If you are a worrier and want ultimate peace of mind, consider rent guarantees or ‘rent-on-time’ solutions. You normally pay a small premium of 2-4% of rental income but you know you will receive rents regardless of whether the tenant pays or not!
6. Act Fast…
As soon as your tenant defaults find out why FAST. If it looks like the arrears could start building up you need to do one of two things:
– Help a tenant to move to cheaper accommodation
– Consider dropping the rent
Don’t sit back and ‘hope and pray’ the tenant starts to catch-up!
7. Minimise Property Expenses
Start scrutinising property expenses and ‘shop around’ to do whatever you can to increase your property cashflow!
Article Courtesy of – Landlord Vision