One of the main causes of stress for landlords is when their tenants fall into rent arrears and are either late or unable to make the payments. There are several ways that you can prevent this from happening so that there is minimal disruption for both you and the tenant.
One of the first steps when you are advertising your HMO for rental is to carefully screen all applicants so that you find the most reliable and responsible people to rent out your house to. Asking for references, both from their previous landlord (if they have one) and also their employer or college tutor will give you a fair indication of their past history and character.
Make sure that you meet the tenant more than once and spend a little time with them talking and getting to know them. This is good for building a working relationship with them and will also give you an idea of what they are like and whether they will be the right people for renting from you.
At this point, it’s good to bear in mind that you are free to turn away any individuals who you are not sure about, either as a result of reading their references or from the meetings you’ve had with them. It’s better to go with your gut instinct rather than to choose a tenant that you’re not happy with. It’s your property and part of making a good investment is to select reliable tenants who will look after the property properly and pay their rent on time.
Making a good decision here will likely save you from the hassle of late rent payments, but the following advice is good to bear in mind anyway.
Once you have chosen the person (or people) who will be occupying your property, you need to explain to them clearly (and back it up in writing) what your expectations are for rent collection. The date the rent is payable, the amount, the means of making the payment, the initial deposit and the consequences of late payment must all be communicated so that there is no misunderstanding. You can refer back to the document at a later date, should you have any issues with rent collection.
It’s important to set the right precedent, as getting in to the habit of accepting excuses can lead to the tenant assuming that it’s ok to pay late if they have a good enough reason. The next time the rent is due, they may be late again and expect you to be understanding once again.
Communicating everything in writing means that you cover yourself against the “he said, she said” scenario and gives you a paper trail should you need to take further action in the future.
As soon as the rent is late, you need to send out a late notice straight away. So for example, if the rent was due on the first, then send a notice out on the second. Then regularly send out notices until payment is made.
If necessary, you might need to check with the local authority what the regulations are for eviction and there may be certain actions that you need to take before you go down that route, such as a final notice or series of final notices.
Property investment is a worthwhile and profitable means of investment. These tips will help you to have a good working relationship with your tenants and minimise the risk of late rental payment.
Nick Fox started his property investment career 10 years ago and his portfolio has grown to one of the largest in the UK. Nick now mainly focusses on HMOs (houses in multiple occupation) and works to help others achieve property success too. Visit here to find out how he can help you.
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