It is amazing to me how many people in the real estate investment business think that they are making their life easy when they are in fact making it far more difficult. Here’s one example.
Some owners move new people in during the month and have them pay their deposit and first month’s rent at that time. Then the owner/manager expects the resident or tenant to pay every month thereafter at the same time of month as their original move-in date. Seems logical and easy enough huh? Don’t be fooled. This process will quickly turn into a management nightmare for anyone who manages more than one or two units.
Collecting rent throughout the entire month, based on the move-in date of a resident/tenant will complicate your management process exponentially. This one decision will make your administration functions at least 30 times more difficult! If you manage on a space-by-space or unit-by-unit basis you may have to do every single management function one time for each resident or tenant, instead of in blocks. Your time is more valuable than that. Instead of this too-frequent process, consider establishing the policy that all rents should always be due on the first of the month regardless of what day a resident or tenant moves into the property. Upon move-in simply collect the deposit and the prorated first month’s rent. Thereafter, rent is due on the 1st of each consecutive month.
Making all rents due at the same time (as a standard operating procedure) will mean that you’ll always know who is late and who is not, that all of your correspondence can go out at one time, that all late notices are originated at one time and that all three-day Pay/Quit notices happen at one time. It means that all invoicing/statements are originated at one time and all renewal notices, extensions and rent increase letters go out at one time. This one policy and practice allows you to maximize your technology (computer software) while minimizing the demand on your time. So make your life easier. This one suggestion, if followed, can save hundreds and hundreds of hours a year in needless duplication of effort, bookkeeping, tracking, scheduling and wasted filing and document origination time. This is only one of a large number of management practices that will improve not only your efficiency, but your profitability as well. If we can help we’d love to. Good luck in your career.