The Landlord Lens - How to Deal with Late Rent Payments

Episode Date: March 5, 2025

Late rent payments can be stressful for landlords, but with clear communication and proactive strategies, they don’t have to derail your rental business. In this video, we’ll share actionable tips to handle late payments professionally, maintain positive tenant relationships, and prevent future issues.

I'm Jonathan, this is Krista, and we're here to help you be a better landlord. All right, Krista, today we are talking about everyone's favorite subject, getting paid. Dun-dun. Specifically, though, why tenants pay late and how landlords can prevent it. It's a critical topic. In fact, it's one of our most requested topics because people want money on time. That's right. We all like money.

Landlords are motivated by money, it turns out. We do exist in the capitalist society. Sure do. Okay, so let's start with why do tenants pay rent late? Let's get into the mind of our tenants. Really put yourself in there. You know, honestly, there are quite a few reasons why someone could pay late from the preventable to the unfortunate. So that could be anything from, you know, maybe they've lost their job. Maybe they just forgot. Maybe they were trying to pay rent in a way that was kind of difficult and they got kind of bamboozled or they put the check in the mail and it got lost or they gave you a cash envelope. and it didn't have enough in it. Like there are lots of different reasons why this could happen, including, again, bank delays, payroll issues, you name it. It's probably happened to someone. Yeah, absolutely.

All right, so let's say that the unspeakable has happened and rent is late. What should you do if it's the first time that your tenant is late with rent? If it's the very first time that they're late, first and foremost in any situation with your tenant, you're going to want to focus on communication and empathy, right? You want to figure out the root of the issue. Is it that something has happened in their life or is it that maybe they just forgot or they thought that there was a grace period? So get in touch with them first.

Ask questions. Be open. You don't want to come at this aggressively, even if you are frustrated. We empathize with the frustration. But this is their first time and you want to try and make sure that it doesn't become a habit and that you are a safe person to talk to about making sure you get paid on time. Yeah. So check in with them. Ask what's going on.

If it's something that feels more like a one-time situation like them forgetting or thinking that they were in the grace period and they're not. Communicate your expectations again. You can point back to the lease. You can say, okay, actually here in the state of Colorado, the grace period is X. So make sure that you pay rent by this date every month. Otherwise, you will incur late fees of this amount. If you're not sure what those amounts are or what you can legally charge, please check your local laws. That will help you understand what you can do there. If they've run into some kind of issue where paying rent has become a difficulty, I would point them to their local resource line. So here in Colorado, that's 211. You can give them a ring and they will help connect folks with rental assistance, along with a myriad of other services.

You can look up your local information line online if you're not sure what number it would be for you. Of course, there's also the flip side where it could be an ongoing situation, like maybe a contributing member of the household is in the hospital or the tenant has just lost their job. in which case you're going to need to be a little bit more creative. So consider if there are solutions that enable you to get paid on time while lessening the burden on your tenant, such as setting up a system in which they pay you chunks of rent across the month, like a payment plan versus one lump sum. Sometimes that can be really beneficial, especially for folks who have, you know, let's say like a waitressing job or your money is kind of variable. If you have those kind of standards in place, make sure that they're written down and that everyone signs off.

on them, but that should help you get rent on time. Just be sure that you also include the consequences if that does not happen and if rent continues to be late or incomplete. Okay, all that makes sense, but what if this is not the first time that rent has been late? What if it is starting to look like a habit? Ooh, super frustrating. So first, I would say you've probably already taken the step. If you've had the conversation, you said, these are my expectations, here's what's outlined in the lease. You've tried to come to a solution the first time that they didn't pay rent on time. at that point you need to take more specific actions. So you don't want to wait too long, but if they are a couple months past due,

you want to check your local laws and see, okay, what are my solutions in place? If you can, you might want to offer a cash for keys situation. You've heard of cash for keys. We have talked about cash for keys many times on this show. But if anyone out there is not aware, educate the people. I am here to educate the people. So cash for keys is a situation in which you as the landlord give your tenant money in exchange for them vacating the property and ending the lease. Now, if that raises the hairs on the back of your neck and you're saying, why would I give money to someone who owes me money?

I get it. It's not comfortable and sometimes it's very annoying and frustrating. But the reason you want to do that is because the ultimate goal is to reclaim that property and get someone in there who can pay rent on time and in full. If that's not the current tenant, you need to try and reclaim the property as soon as possible. And of course, the other avenue you can consider is eviction. A lot of folks are interested in evictions from the property owner side of things. However, I do want to caution you that evictions are very costly, both for you and to a degree your tenant, although that's not the main situation here.

They're also super long. It's a long process. It can take months up to a year in some places, and you will be missing out on more rent throughout, which is why, although cashier keys might not feel good, it can be a good business move if it's allowed in your area because you can reclaim the property faster. Yep. I just kind of want to stress that, that, you know, don't jump to an eviction. An eviction is not the answer most of the time.

They do take a really long time. We did a webinar about evictions a while ago. You can find it on our website, turbosanit.com slash webinars. But we talked with a landlord who, I believe, his had been going on for 18 months, his eviction process. So during that period, you know, you're not making any money. You cannot rent out your unit probably, depending on the circumstances. And it's just a giant pain.

So cash for keys doesn't sound good, but it might be the best solution to a bad problem. Okay, so now let's get to the big question. How can landlords stop their tenants from paying rent late? There's a two-pronged approach that I would recommend people take. The first is preventative. The second is actionable. So on the preventative side of things, please, please, screen your tenants. Screen your tenants. You want to make sure that someone who's moving into your property

have the financial backing to maintain their obligations to you. And that means taking a look at what money they're bringing into their own accounts every month. If you're not sure what your rent to income ratio should be, we have a calculator. You can use it for free, turbotenet.com slash calculators, I believe. I believe that'll do it. You go poke around and you find it. But it's there. It's very easy to use. You can see what's recommended. typically rule of thumb is about three times the amount of income to rent. So keep that in mind. If you have a great tenant or a great prospective tenant and they don't have that income level,

consider requiring a guarantor or a co-signer. We also have a myriad of resources on that if you'd like to learn more. But that way, you can ensure that they have the money to pay you and maintain their obligations. So yeah, screening tenants hugely important. Hopefully you out there are aware of that. But what Krista is saying is going beyond that screening report and taking a deeper look at their financials. So not just looking at the credit score and calling it a day, but also looking at how much income do they have coming in? That's really, really important, right? They could have an

awesome credit score, but maybe they were just laid off. And now they want to come into your rental without any income coming in. That's something that you should include in part of your screening criteria, because then you'll catch it, you know, before it ever becomes a late rent payment. Absolutely. And if they don't have someone in their life who could serve as a guarantor, there are services out there where they can pay a fee and make sure that they have what they need to continue paying you and maintain their housing. So that was the preventative side. What about the more actionable side? The actionable side, and this might sound silly, but you need to make paying rent as simple as possible. It should be easy. It should be something they can do instantaneously. It should

require very little logistics from either side. And so, of course, my solution would be to collect rent through TurboTenet. You can do it for free. There are also a bunch of other benefits, including the fact that we send rent reminders to your tenants on your behalf so they always know what's coming due. They can also enroll in auto pay. So they don't even have to think about it. The money comes out of their account. You're happy. They're happy. It's a win-win. Beyond that, if they do run into a situation where they don't pay rent, you can set up automatic late fees. So that saves you time and logistics from trying to chase them down. You can relax. We'll do the heavy lifting for you. If they pay rent, great, they should. And we'll send over a rent receipt, which is required in a

number of states, but it's also just good for their financial health so they know that they've been successfully paying you. Lastly, we offer rent reporting, which they can enroll in for a low monthly fee. Now, this is really interesting because it benefits both parties. Landlords benefit because it further incentivizes tenants to pay rent on time and in full. Tenets benefit because rent reporting basically takes their biggest monthly bill and uses it to build their credit history. So that's a pretty good win and pretty good reason to try and pay rent on time. Absolutely.

Yeah, only on time rent payments are reported. So if they are late, but they're paying for rent reporting, then You know, they're not going to get any credit for that month. So, yeah, it's a nice just backup. And as Krista said, all those rent reminders, all those automatic late fees, all that comes from TurboTenman. So we're the bad guy. You can just be like, oh, I guess it's that system being pesky again.

Anyway, you should pay your rent. Anyway, give me my rent, please. Just kidding. You don't have to see that. We will say that for you. That's right. It's Krista, who calls them? I do, each one.

And I use a scary voice and fake mustache. Can you do the scary voice for us? Would you pay your rent? Whoa. I got chills. Yeah, I bet you'd pay your rent if I did that. Absolutely. So if you'd like to indulge in my scary boys or really just get the best way to have your tenants pay rent,

sign up for turbottenant.com. It's free. You can collect rent easily. They can pay through whichever means they need to, bank account, credit card, debit card. We make it as simple as possible so that you can succeed and scale your business. Awesome. Well, thank you for talking through rent payments with us. If you out there have any other solutions for whenever rent is late,

Please leave them down below and come back next time for another episode. Don't forget to like and subscribe. TurboTenant is the all-in-one platform for landlords to manage their rental properties. From vacancy to tenancy, we have you covered with industry-leading tools and expert advice. Landlord better from anywhere for free at turbotenant.com.