How Should the Landlord Collect Rent?

Landlord is a property owner who rents out his or her residential property. The aftermath of the 2008 collapse of the real estate bubble produced many "accidental landlords - property owners found themselves turning to renting to help makes ends meet. This is especially true for people who bought real estate for investment purposes. Many of them have little to now experience with renting their property. This article will address one of the most important aspects of renting - collecting rental payments.

Decide on Rental Rate

First and foremost, a landlord must decide how much he or she will charge for rent and how often the rent will be collected. Usually, the landlord collects rent on either weekly or monthly basis. The former arrangement is usually used in seasonal and/or temporary housing while the later is usually used in more permanent year-round housing. Landlords should also decide on a due date. It can be either a specific date (such as every 15th day) or a specific time period (at the end of the third week of the month).

When it comes to setting rents, the landlord should check the rents on similar types of property in his or her neighborhood. The trick is to find a rate that would be high enough to satisfy the landlord's financial needs yet low enough to attract tenants. If the rents are too high, they will simply look elsewhere.

Decide on a Payment Method

There are a number of ways renters can pay rent. Landlords can require the same method for all tenants or give the tenants a choice of one of several methods. The landlords will also need to specify how the tenants can send their rental payments. The payment methods include:

• Cash - one of the more straight-forward methods on the list, it is also one of the least secure. Landlords who choose this method should either collect the rent in person or have the tenants drop it in a designated locked box. Sending cash over mail isn't safe - it is likely to be lost or stole along the way.

• Check - while personal checks are popular, they are not the best way to guarantee payment, since there is always a chance that it bounces. To reduce the risk, landlords can require a certified check or a cashier's check. The check should include the tenant's name and detailed bank information.

• Money orders - one of the more secure methods on the list. Since the tenant already paid for it when he or she bought it, landlord has a better chance of getting the money than through checks. They can be picked up in person or sent via mail. Should it become lost, landlord can ask the tenant to give a receipt, which would allow him or her to recover the payment

Set Late Payment Penalties

To discourage tenants from making late payments, landlords may want to decide on penalties, something that the tardy tenant would have to pay along with the regular rents. Landlords should make sure to apply penalties consistently and universally to avoid accusations of unequal treatment.

Prepare a Rental Agreements

Once everything described above is decided, landlords should use that information to create a rental agreement. By signing it, a tenant and a landlord agree to abide by it's terms - the party that violates it becomes liable under local and federal law. It should be noted that every piece of the above-mentioned information must be stated clearly and precisely. Otherwise, the courts may find it invalid.