Rent is Due! Due on the 1st, or Late on the 5th?


A property’s performance is measured by two components. The ability to generate revenue and the ability to control expenses, resulting in the Net Operating Revenue.  Revenue is the product of rent collection.

Rental revenue generated by occupancy and related fees are the driving forces for revenue generation. Without effective rent collection, achieving an occupancy goal is a hollow victory. The education for the onsite team has to focus on the balance between rents collected and expenses needed to maintain the physical asset.

It’s a puzzling moment to the on-site staff to learn a vendor has not been paid for a service, “it’s in the budget!” But it was also in the budget, to achieve an occupancy goal and collect the corresponding rent. Without rent collection, the property, a small independent business will not have the resources to satisfy its financial obligations, i.e, pay its bills.

Most residents pay their rent on or before the due date. Encouraging residents to use payment Payment portals; establishing auto-pay functions can improve rent collection. Every property has a percentage of residents that pay late or regularly are placed in the court system to obtain a court order demanding payment or an eviction will occur.

Changing the personal habits of residents is a slow uphill, maybe impossible process. Managers do not have the ability to make a resident pay their rent. But, we can stress the importance of timely payments.  Step One starts with the landlord reference before a resident moves in. Securing a positive landlord history, a resident that pays on time, indicates they will probably continue to do so. Step Two, when quoting the rental rate, the phrase “due on the first,” must be stated. An orientation for new residents that explains when rent is considered late, before emphasizing when rent is due, implies paying late is an acceptable practice.

A successful on-site manager develops the skill to communicate the importance of timely rent payments, as well as the verbal tools to request the rent from a resident when it’s late. Placing notices and door tags notifying residents of late rent and unpaid balances informs residents balances are due, nothing is more effective than a face to face conversation.

As residents make the decision to rent an apartment home, they are also making a commitment to make timely rental payments. Understanding, the resident is violating their lease with late rent, may give a manager or leasing staff more confidence to initiate this conversation.

A sizable amount of time and financial resources is required to remedy unpaid rents; phone calls, notices, preparation of documents and ultimately legal fees. Imagine what can be accomplished with the “found time.”

Laying the groundwork before a resident begins their occupancy, stating paying on time is the only acceptable practice, will improve the property collections.

Lori Hammond
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