It goes without saying that one of the keys to success as a Housing Provider is getting your Rent payment on-time and in-full. With that accomplished, everything else just falls into place…the mortgage, insurance and taxes get paid…and there might even be a little left over as profit…life is good.
But in the real world, it doesn’t always work out that way. Many things can go wrong in any Landlord/Tenant relationship. Late payments and arrears can quickly add up, causing stress and conflict, eventually leading to legal proceedings and evictions. It’s a downward spiral and a no-win situation.
Most of the time, the Tenant gets the blame. We’ve all heard the horror-stories about Tenants not paying rent for months on end…the Landlord struggling to make ends meet, while waiting helplessly for an eviction hearing. These stories drive fear into the hearts of would-be Landlords, enough to make them avoid investing all together.
The thing is, nobody talks about is the fact that most problems are avoidable and are most often caused by the Landlords themselves…not intentionally, but because of bad choices and decisions. It’s easy to blame the Tenant for a bad situation, but the root cause can usually be traced back to the Landlord ignoring the fundamentals.
So, what are these fundamentals?
1. Provide a high-quality Product (ie. Your Property!)
Characteristics of the property, such as location, cleanliness, and maintenance standards, determine the quality of the Tenant that you attract. A high-quality property will attract high-quality Tenants. Pretty simple. Properties in the worst part of town will generally attract a lower-quality Tenant. By nature, people want to associate with people that are the same as them, in terms of appearance, lifestyle, habits, etc. Better quality Tenants will naturally have a more stable lifestyle, which translates into better payment patterns and better communication with you if there ever is an issue.
2. Screen Applicants thoroughly
Choosing the right Tenant requires a lot of patience and attention to detail. So many Landlords find themselves with payment issues because they didn’t follow a proven Tenant Screening process. Instead of doing their due diligence, they tend to take the easy money, by taking the first Tenant that comes along. This is almost always a recipe for disaster. It’s so important to first meet with a prospective Tenant, to get a feel for them. Then you must do the proper due diligence to ensure that they say who they say they are and that they are able to pay the rent.
3. Know the Law and follow it!
The Residential Tenancies Act is the body legislation that governs the Landlord/Tenant relationship. Not knowing or following the laws will surely lead to friction with the Tenant and their first means of protest or retaliation will usually be withholding of their Rent payment.
4. Make it easy to Pay
Use technology to remove barriers to payment. Cheques and cash are a thing of the past. E-transfers are better, but not ideal, as it depends on a person remembering to do a task every month. Automated payments and pre-approved payments through an online platform can make the process easy and hassle-free, while improving a Tenant’s on-time payment patterns.
5. Automate
Again, technology should play a major role in the end-to-end rent collection process. Automated Invoices, Reminders, Payments, and follow-up can reduce headaches and the time normally required to do the work. Today’s online platforms can also improve communication, by using integrated phone, text, app and email messaging.
6. Provide Incentives and Rewards
Your Tenant should be viewed as your Customer and should be rewarded for being trustworthy and loyal. Incentives and Rewards are an easy way of saying ‘Thank you for your business’. They also encourage a favourable payment pattern and increased Goodwill.
7. Stick with the Process
If there is a payment issue, it’s important to be professional and empathetic, but it’s also important to be strict and follow a process for dealing with the late payments. The Landlord and Tenant Board has defined a process to be followed, including serving the appropriate Notices, with the option of filing for a Hearing with an Adjudicator. This is a professional relationship, and your Tenant should know that you will not tolerate late payments.
8. Provide good Customer Service
Your Tenant is your Customer. Not only are they buying a product from you (ie. your rental unit), but they are also buying your ‘after-sales service’, which is just as important. Apart from the rental unit itself, there are additional expectations that form part of the package, such as: being professional, being responsive, being respectful of their rights as Tenants, adequate maintenance of the property, providing the Tenant with required paperwork in a timely manner (e.g. copies of the Lease, Rent Receipts), all go a long way in building a positive, mutually beneficial Landlord & Tenant relationship.
Being a Housing Provider is a challenging business. Things will not always go as planned, but you can minimize your risk and avoid 99% of the problems by mastering these simple fundamentals!
