The Denver real estate market is finally starting to cool. With 30-year mortgage rates nearing 7%, there is less demand to purchase a home.
Instead, many home shoppers are choosing to buy over rent. Demand is so strong in Denver that the average rental price now exceeds $2,500. This means that investors are capitalizing on these rising prices.
In order to truly take advantage, property managers need to stay up on rent collection. Read on for a comprehensive guide to rent collection. Explore landlord tips for collecting rent and the best strategies for dealing with Denver tenants.
Why Is Rent Collection So Important?
Collected rent is an investor’s financial lifeblood. This is the revenue that keeps their real estate investing business afloat.
Did you know that more than 6 million American households are behind on rent? This amounts to roughly 15% of all households.
The inflation crisis is placing additional stress on renters. The cost of everyday goods is increasing rapidly. Items like fuel, utilities, and food are on the rise.
With rising prices, more Americans are struggling to make rent. This makes it even more crucial for property managers to collect when they can.
What Are the Best Collection Strategies?
Not all property managers use the same strategies. Some tactics work better than others. Some old-school property managers swear by collecting rent in-person on the first of the month.
The best approach is to remain flexible with your Denver tenants. Continue reading for a brief description of different collection topics:
Payment Method
Does it really matter how you receive your tenant’s rental payment? The best bet is to give your tenants a myriad of different ways to pay.
You can accept checks through the mail or in-person delivery. Some property managers allow tenants to drop off their monthly payments in a lockbox.
The more modern approach is accepting online or digital payments. You can send e-mail invoices to remind tenants that the rent is due. Digital accounting systems like PayPal, Venmo, or Zelle all work.
Timing
The first of the month is still the best time to collect. Tenants are exhausting their monthly budget faster due to inflation. You should collect the rent first before tenants pay utilities and other competing priorities.
The first of the month is an industry standard and establishes a routine. It is easy to remember and likely coincides with their job’s payment schedule on the 1st and 15th of the month.
Late Fees
It is important that the rental agreement lays out the consequences for missing a payment. While flexibility is important, you still need a stick to enforce timely payment.
Late fees are one way to incentivize tenants to pay. You should also clearly lay out the terms for eviction. Keeping rental law in mind, your tenants should know repeated missed payments can lead to early termination of the rental agreement.
Your Guide to Collecting Rent
You are now ready to start collecting rent. In a tight economy, it is crucial to take payments early in the month and through any digital or traditional method.
If you want to learn more about rent collection strategies, contact us today to see how an experienced property manager gets it done.
