Rent collection has to be streamlined and automated, otherwise you don’t know when it’s coming in, how it’s coming in, or whether you can trust your tenants to pay on time.
To keep your Philadelphia rental property profitable and well-managed, set up a rent collection policy that’s easy to enforce. Starting with a plan for when rent is due, which payment methods you’ll accept, and what the consequences are if it’s paid late will set you on a path that leads you towards on-time rent collection.
Here are the ins and outs that professional Philadelphia property managers like us follow when we’re collecting rent from tenants.
Establish a Consistent Philadelphia Rent Collection Process and Policy
You need a rent collection policy that you’re willing to enforce. Put it in writing, and include that rent collection policy in your lease agreement. Before your new residents move in, explain the policy in detail so they understand your expectations when it comes to the timely payment of rent.
Every rent collection policy should include the following:
- When Rent is Due
Typically, rent in Philadelphia is due on the first of the month. This is what most tenants expect, and unless there’s a reason to collect it on a different day, we recommend you have the due date as the first as well. You might find it useful to schedule rent payment reminders for tenants a few days before the first so they can plan accordingly.
- Grace Periods and Late Fees
Pennsylvania does not have a law that requires a grace period be in place before late fees can be collected. Your rent collection policy should reference whether there is a grace period, however. If the rent is due on the first of the month, for example, perhaps it’s considered officially late on midnight of the third day of the month. You aren’t required to have a grace period, but if you do have one, include it in the lease.
Reference late fees, too. Typically, landlords will charge between 5 and 10 percent of the rent as a late fee.
- How Rent is Paid
Most Philadelphia tenants will expect and prefer to pay online or electronically. This is a convenient, secure, and easy way to pay rent, and it cuts down dramatically on late and unpaid rent. If you’re working with a property management company in Philadelphia, you’ll likely have access to an online portal where rent payments are automatically collected from tenants and then deposited into your account. If you’re managing on your own, explore the many payment apps that can help with digital rental collection.
A large majority of the tenants we work with prefer online rental payments, but there’s still a place for checks and money orders when tenants choose not to pay online. The more options you provide your tenants, the more likely you are to get the rent paid on time.
Always include the payment methods that are permitted so tenants know how they can pay rent.
Communicating with Tenants about Rent
Be willing to keep communication open and transparent around rent. You want to hold your tenants accountable to on-time rental payments, but you also want them to be comfortable talking with you if they’re worried rent might be late or if they have a question.
Communicate that rent is due. When you send reminders to tenants via text, email, or phone to ensure that they pay rent on time, there’s no reason for them to “forget” to pay on the first of the month. You can typically automate this communication and schedule it to go out a few days ahead of the rental due date.
If you don’t receive the rent on time, follow up with your tenants. Reach out and remind them that rent was due, and ask when you can expect it. This communication should be done in a professional and polite way. It is also essential to stay respectful while communicating with your tenant, who is likely to be sensitive or defensive when there are overdue payments.
Always thank your tenants for their on-time payments, too. Not only is this positive reinforcement, it also allows you to express your gratitude. This will make tenants feel appreciated, and likely contribute to both your relationship and your goals for retaining residents.
Document Your Rent Collection Process
Have a reliable record of rent collection. This will likely be electronic, especially if you’re utilizing property management software that’s available even to landlords with one or two properties. Or, maybe you’re still using a paper ledger. Whatever your process happens to be, you want it to be clear and easy to follow. It must demonstrate when rent was paid, how much was paid, and whether there was anything else included, such as a late fee or pet rent.
Automation and technology can benefit your commitment to collecting rent on time effectively and professionally every month. If you do have to go to a judge to evict a tenant, you’re not sharing the details of your own bank account or digging up the written receipts you provided to tenants. You’ll have a clear and easily accessed record of when the money came in and when it didn’t. Having records in order will help you be effective.
Here are some of the things that are not professional when it comes to collecting rent:
- Showing up in person to demand rent be paid.
- Turning off utilities or changing locks when rent is late.
- Making threats.
You’ll find yourself in a lot of legal trouble if you don’t follow a professional rent collection process that complies with all laws and best practices.
You can avoid rent collection headaches entirely, of course, by working with a Philadelphia property manager. We have the tools, technology, and experience to bring rent in on time and make sure you get paid. Contact us at TCS Management.
TCS Management is a full service property management company headquartered in Philadelphia, Pennsylvania, also serving Cherry Hill, NJ, Wilmington, Delaware, Nashville, Tennessee and the Atlanta, GA and Charleston, SC metro areas. We focus on single-family and multifamily residential property management of homes, condos, townhomes, and apartment buildings.
