"Hack" of the Wk - 10/13 -Landlords Learn from Credit Card Companies!
Landlords, are you having problems collecting rents? Last week, in my "Hack" of the week, I provided Check Authorization as one way to avoid having to chase the rent of your tenants - by being able to print the rent check of your tenant from your own printer. Here's the link:
This week, my Hack of the week is actually even simpler. The nature of these "hacks" is that these are simple action steps that anyone can do or implement in their real estate business.
This "hack" of the week will help you increase your chances of collecting the rent. Credit card companies do this. Prior to them doing this, their collection rate is very low. But once they implement this, their collection rate increased to over 90%. What is "this"? It is...
SENDING THEIR CLIENTS AN INVOICE (or a credit card statement).
That's right. When you send someone an invoice that informs them how much they owe and reminds them to pay it, there's a high chance that the amount will get paid.
We send a simple invoice to our tenants that remind them that their rent is due on the first and late by the 5th. It also reminds them of the penalty in case they don't pay. You can mail them these invoices on the 20th of the month prior to when the rent is due (example: rent is due on August 1, you mail them a letter by July 20). Your tenants should receive the invoice no later than the 25th of the month which gives them one week to ensure that they have enough funds in their account. Your invoice can also contain their total balance due (in case they were late last month or if they have repairs done on their property).
If you have 1, 2 or 3 tenants, you can do this manually or one letter at a time. If you have more than 3 tenants, I suggest getting a software that can do this for you. Quickbooks is what we use and it can produce an invoice that looks like the following:
Your tenants are human beings and don't have perfect memories. Sometimes, they forget the rent is due and reminding them about it increases their chances of paying it. Also by sending them an invoice, you have an added paper trail that you can use in case you need to evict your tenant.
So...send an invoice, collect the rent and be a happy landlord!