It’s not that complicated. You have a rental property (or two or six). Each
month, someone pays you rent and each month you deposit the money in the bank.
Handling the proceeds from rental property simply isn’t a big deal.
But did everyone pay for the rental property they’re occupying this month?
The Smiths asked for a couple of extra days and the new tenants asked that their
rent be due mid-month instead of at the first of the month. And what about the
young man who never seems to pay on time and is so difficult to track down? If
handling your rental property is becoming a lot of trouble, you may find that
it’s time to do some serious bookkeeping. Screening those who want to use your
rental property may be a good way to start.
Some people think they don’t have the right, the money or the time to check
credit reports on potential tenants of rental property. Anyone who has a
business interest with someone has the right to check the credit report. The
fact that the person wants to rent your rental property qualifies. It will cost
you a few dollars to run the check, but you may save much more than that in the
long run, simply by being forewarned.
Does that mean you won’t rent to this person? Maybe, but it might just mean
that you’ll take some precautions to be sure that you’re going to get paid for
the use of your rental property. If you have someone with a history of making
payments late, you may just require that person to set up an automatic
withdrawal so that the money is transferred from his bank account to yours on a
specific day every month, eliminating the need to chase him down to collect.
In addition to running credit checks, you can require that a person moving
into your rental property list some alternative ways you can contact him. A
parent’s phone number can often make the rent come in on time. If the owner of
the rental property calls mom or dad and asks about the rent, the tenant is
likely to be under some serious parental pressure to pay. It’s also a good idea
to have those numbers in case Junior moves out without paying the rent due and
or leaves a mess that the cleaning deposit won’t cover.
While the landlord with only a few pieces of rental property may think it’s
overkill to create a file on potential tenants, but it can seriously save time
and money. There are lots of companies that offer blank forms for all sorts of
transactions, including rental property agreements. The person moving into the
rental property may be the friend of a friend, but having a signed legal
document is just good business.
Creating a system of tracking payments on your rental property, setting up
automatic payments and establishing a practice of having signed rental
agreements from every tenant is a good practice. You may also find that you’re
better equipped to see what rental property is turning a good profit, what
tenants seem to have problems paying rent and which rental properties may need
some rent adjustments. And all it takes is a little bookkeeping.
