Collecting rent on time is important to the integrity of your lease agreement and also to your own profitability as an Albuquerque rental property owner. A good rent collection policy and solid tenant screening will ensure that rent comes in on time. When tenants understand your expectations and you consistently follow your own policy, you’ll find you have an easier time collecting rent when it’s due. Providing a number of different options for tenants to pay can also increase the chances that rent will be paid on time.
Even with a good policy in place and reliable tenants, however, things happen. How do you deal with late rent payments?
There are laws around how much of a late fee you’re able to collect, and eviction has become more complicated in recent years. Here’s how we guide owners and tenants through managing – and avoiding – late rent.
Establish and Enforce a Rent Collection Policy
Make sure your tenants understand your expectations when it comes to rent collection.
Discuss your rent collection policy before your tenant pays the security deposit and signs the lease. In your lease agreement, include clear instructions about:
- How much rent is due
- When rent is due
- What the consequences will be if it’s paid late.
If you have a grace period, you’ll want to include that in your lease and your rental collection policy as well. Let tenants know when rent is officially late.
Charge a Late Fee
It’s a good idea to charge tenants a late fee. This not only gives you a few extra dollars for your trouble, but it also deters tenants from letting the rent payment slide for a couple of extra days.
According to New Mexico state law, the amount of a late fee you charge cannot exceed 10% of the monthly rent. This is pretty easy math; if you rent out a home in Albuquerque for $1,500 per month, your late fee cannot be more than $150.
Collect the late fee consistently. You can apply it to the overdue rent as soon as it’s late. There is no mandatory grace period in New Mexico.
How to Proceed When Rent is Late
If rent is late, communicate with your tenant as soon as possible. There’s always a chance the tenant simply forgot to pay.
When you’re unable to reach your tenant or the rent still doesn’t show up, you’ll want to move quickly to begin the eviction process. This does not mean you’ll evict right away; it’s typically a last resort. You’ll want to try to work with your tenant to get that rent paid. However, be prepared to evict because the entire process will likely take longer than you expect and you want to mitigate the risk of losing more rental income.
When you cannot collect rent or motivate your tenants to cooperate with you, serve a 3 Day Notice to Pay or Quit. This is essential before you begin the eviction process.
We can help you with rent collection and anything else pertaining to Albuquerque property management. Let’s make sure your rent comes in on time. Contact us at Bruni Karr Agency.
