It can be challenging working with tenants and collecting rent. Many times an unexpected car repair or medical bill will come up. Or, a tenant may lose his or her job and lose income for a month. This can make is extra difficult for tenants to get caught up in paying rent. Most tenants will have a hard time paying the next month’s rent plus a month in arrears. In these situations, we have considered a lease modification for qualified tenants.
There are a couple of modifications we consider for tenants who had a temporary loss of income. The first option is to draft a new lease and modify the monthly rent. If tenants have a $1,200 balance, we may increase the rent by $100 for a 12 month lease or $66.67 an 18 month lease. These are just sample examples. The lease modification will allow the tenants to pay the balance off over the term of the new lease. This is a much better alternative than evicting a tenant. Assuming the loss of income was a one-time occurrence, this can really be good solution for a tenant who has paid rent in the past. The tenant is also more likely to remain in the property and become a long term tenant. If the tenant is constantly late, this would not be a good solution. Instead, we would only allow the balance to be paid over a few months to avoid eviction proceedings.
We also run into situations where the tenants have a hard time paying rent the beginning of the month. The monthly rent may be a large portion of a single pay check, and this leaves little room for unexpected expenses. Many tenants don’t have a credit card to pay for these expenses and have little choice but to use a portion of rent funds. We have offered bi-weekly rent payment options, and we charge tenants every two weeks, or 26 payments per year. If the monthly rent is $1,000 per month, we charge the tenants $500 ever two weeks on a corresponding payroll date.
You would be surprised how many tenants will opt for paying rent bi-weekly. It can be a win-win scenario for both landlord and tenant. The landlord receives more rent than a monthly lease payment (26 payments per year), and the tenants are better able to manage their finances by paying rent when they are actually paid. It may be more costly, but it is a better solution for their family.
There are other options such as processing rents by credit card, check by phone, and bank draft. These are services we offer our tenants. Many times family members will call our office and pay by credit card or check by phone. This is one of the advantages of using a professional Austin Property Management company to manage your property. Offering a wide variety of payment services helps us collect rents in a timely manner and many times avoid loss of rent and eviction process.
If you have any questions, please call us at 512-257-9836. Our office provides sales, leasing, property management, and mortgage services.