- Real Estate
Why Landlords Must Collect the Rent During the Holidays
Remind Tenants to Pay the Rent, then Enjoy the Holidays
The end of the year holiday season is the most financially stressful time for landlords. Tenants will choose to make monetary decisions, between traveling and buying gifts for family and friends, or paying the rent. If they need to travel, expect the potential of almost two months of lost rent between November and January. As a landlord or property manager, you must be proactive.
Bill collectors and organizations all look for money at the end of each year. They expect their outstanding accounts to be paid in full. Overdue credit card bills, child support, lay-a-ways, student loans, charities, and medical bills – they all want cash. As a landlord or property manager, you should make some calls to your tenants. Send a letter reminding them that rent is a bill, too. Ask them to pay all rent due by the end of the year. If the rent is not paid on time, your mortgage will be late, and the bank will give you a call.
You don’t want to be seen as a Scrooge during the holidays. You may even believe that asking for the rent during this season is ill timed and inconsiderate. Still, your tenants signed a lease to pay their rent every month. Understand that when a tenant doesn’t pay the rent during the holidays, they are using that money for their own celebratory pleasures or other debt obligations. Will your vendors, the utility companies, and the bank or mortgage companies allow you to do the same?
The holidays should not be a free pass for tenants. It sounds harsh, but housing courts are stilll open during this time. If you make a habit of firmly collecting the rent during the holidays, the tenants will get in the habit of paying the rent during the holiday season.
Here is an example of what can happen over the holidays with a tenant’s misplaced priorities:
- The November Rent is $1,300, but the tenant paid $750 because of Thanksgiving
- The December Rent is $1,300, but the tenant paid $0 because of Christmas
- The January Rent is $1,300, but the tenant paid $500 because of New Year's Eve
The tenant has paid less than the full rent for three months, and owes $2,650 by the end of January the next year. That’s if you’re lucky. People get fired before Christmas. Employees get laid off after Christmas. Rent can become a casualty. For your own protection, an eviction notice should be sent if the rent is late the first seven days. Remind your tenants of their housing obligation.
Fortunately during the end of the year, employees get pay raises or promotions. They get Christmas bonuses. There are plenty of people who will want to rent your apartment, and able to pay the rent on time. Take rental applications in case you have to evict your tenant during the last three months of the year.
Remember, the same amount of time it takes to evict a tenant is the same amount of time the tenant has to pay in full. Start the eviction as soon as the law allows in your state. The earlier you send the tenant an eviction notice, the more time the tenant has to get his act together before going to court.
Manage your property like a business twelve months of the year. Positive cash flow is a landlord’s main concern. Rental income is why multi-family housing is purchased. Without it, a property cannot be properly maintained.
Your tenant’s are supposed to pay the rent on the first day of the month. It’s late on the second day. If you are consistent, over time, your tenants will expect you to take legal action to evict every time they are late. Your tenants will then place paying the rent as their first priority over the holidays as well as the rest of the year. And, will see to it that the rent is paid before any other bill.