On any day, a good landlord needs to be able to look at a sheet of paper and tell what percentage of the rent has been collected to date. This should be true no matter how many properties you handle.
You need to know, every day, what percentage of the rent came in, and whether it is on a handwritten sheet or on a computer. Quick- Books Pro® does that for us, but many other software programs can handle this.
If a tenant says, “I get paid on the 18th; can I pay my rent on the 18th instead of on the 1st?,” I always say no to these requests because of recordkeeping. If you run your business by having to keep track of who pays when, it gets out of hand. Keep it simple and consistent for ever yone.
Stick to your policies and procedures.
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SECRETS OF A MILLIONAIRE LA NDLORDYou also want to know your expenses, your vacancies, and your rents. Set up a tickler file to know when leases are up, so you can get a rent increase. The law in many states requires you to give tenants 30 days’ or 60 days’ notice when the rent is going up. You cannot just casually tell renters, “The lease is up October 1st and your rent is going up.” You are required to inform your tenants in advance. Check with the landlord association and/or local attorneys on requirements in your area.
Weekly Rent Payments
You might consider collecting rents by the week. This comes with one big advantage: Let’s say your duplex rents for $400 a month;
but if you collect $100 every week for the same property, you actually collect an average of $433 a month—almost a 10 percent rent increase.
If you asked renters in the low- to moderate-income area how they would prefer to pay rent, they would say weekly because they get paid weekly or maybe biweekly. So offer a choice in their rental pay-
I want to stress the importance of writing down all your rental procedures. Many landlords are “single gunsling- ers” who like to do everything themselves. But what if they get hurt or disappear for three weeks, or even win the lot- tery? Someone should be able to walk into your office, look at the paperwork, and figure out rents, due dates, amounts, and the place to deposit checks. I recommend you set up a management book that anyone, including yourself, can fol- low. You also need the book for yourself so that you don’t forget anything.
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7 / Collecting All of the Rent, All of the Time
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ment program. Simply say, “The rent is $400 a month, but we have a special program: If you want to pay weekly, it will be $125 a week.”
Because time is money, it will take more time to collect these rents.
And you are giving them something they want—so get paid for it.
However, we don’t want to visit tenants every Friday night to col- lect their rents. Although we discourage them from coming to our office, we have set up a heavily fortified mailbox with a slit in front of it. Some people make arrangements with their banks to have the rent money dropped off. A lternatively, tenants can also mail it in every week. With weekly payments, evictions are fewer and delin- quency is lower because people get paid weekly or biweekly.
With weekly renters, not only do we get that $33 rent increase, but we also charge them for it with a higher rent. Now, that difference may not seem like a lot, but I get an extra $25 a week, which amounts to $100 a month; plus, we get the extra $33 a month. So instead of receiving $400 a month, it adds up to about $550—an extra $1,700 a year for the same property. Multiply that by several units and you’ll boost your income by thousands of dollars a year. I have so many units now that I may just pay somebody to manage the weekly rentals alone because they bring in so much more money.
You can implement this idea with biweek ly rents but, again, charge for it. When people come in to rent from you, you say, “We have some special programs; how often do you get paid?” “Every two weeks.” Then: “Would you like to try our twice a month program, at
$250 for each payment?”
In addition to getting larger payments, your advantage is that a period of two weeks is the most their payments can get behind. When they pay by the month and pay late, they can get behind by two weeks, three weeks, or even more; and in reality, it often goes to 50 days be- fore anything happens.
The disadvantage of weekly rentals, of course, is the added head- ache of collecting four payments a month instead of one.
Occasionally, people will pay rent in advance. In some cases, you can get three months’ or four months’ rent ahead of time—say when they get a lump-sum settlement or a tax refund. Of course, accept the
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SECRETS OF A MILLIONAIRE LA NDLORDoffer and, if you are feeling generous, give them a discount for the pre- payment.