Making condominium unit sales is a great way to have a passive income source. If you are a lucky owner of a unit or two, this is one of the quickest money sources that can generate significant returns. While it might take a few years or so to break-even with the price you paid for a unit, these are great investments to make that can be highly beneficial in the long run.
However, as the unit owner, you might face various situations that can be challenging. Running condominium duties and turning over each unit to multiple clients is stressful. There is plenty of paperwork involved, and what many landlords experienced last year was not getting rental payments on-time.
How to Handle Late Payments
While a single tenant that pays late won’t make such a big dent in your whole operations, it isn’t fair to allow these to run on continuously. Tenants who are late once or twice during rough times call for empathy, but unfortunately, real estate is a business that stops for no one. As the owner of the condo or apartment, this is still your means of making a living, so you’ll have to start requesting rent payment at some point. Here are ways to ensure that your tenants pay for their monthly bills on-time so that fewer problems occur:
– Stringently Screen Tenants
Preventing late payments typically boils down to the tenants you choose. Screening has to be done with quality to ensure that those who inhabit your condo unit are financially capable of paying on-time and will take care of the place well. A good tenant that means well and has a good demeanour is usually good news, as they have pleasing personalities that won’t collide when you need to deal with them. Don’t be afraid to look at their job status and their credit scores if your condo unit is a high-valued one.
Those who don’t have a credit score that is strong enough or are not gainfully employed with a decent salary might be the cause of trouble and late payments in the future. Consider your condo unit’s value and screen tenants accordingly, as some might require higher standards than others.
– Draft the Contract Comprehensively
Drafting your rental lease agreement is the most important aspect of renting out your condo. No matter how small the unit is, contracts should be as long and as comprehensive as possible. It has to cover all bases, especially stating terms for late payments. Whether you administer a penalty or reach an agreement that is more lenient during times of distress is up to you as a unit owner. Any loopholes in your document mean issues, so be sure everything is listed down in hard writing to ensure that nothing gets past your watch.
– Look Into Your Tenant’s Payment Habits
Sometimes, tenants can cover their horrible spending habits by lying about their current situation. They might pay eventually, but their poor payment habits might be an issue that your contract should address. However, times like pandemics, employment, economic recessions, and health issues might be times for empathy, so it also pays to consider your tenants’ status in life.
– Know the Eviction Process
Payments still need to be made eventually, and you can only stretch yourself so thin. While leniency is nice for the tenant, continued poor payment habits are problematic for you as someone who needs income. You’ll need to know the eviction process and when to start it. It can be messy at times, but if you have a well-drafted contract and the right documentation of late statements, it should be seamless.
Conclusion
Condo unit rentals are a passive income source, thanks to the way rentals work. When it comes to dealing with various tenants, this can be an issue because of the different personalities you’ll have to work with to resolve disputes with late payments. Condo management professionals remind owners that leniency should only go so far, and at the end of the day, rent is still a business that needs to be taken care of properly.
More Property is a premium condo and townhouse management company in Canada. Don’t stress about dealing with your units’ various tenants, and hire an agent to take care of all challenging duties today!