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Tenants can’t pay rent on time if they don’t know when it’s due. As you prepare to rent out your Hampton Roads investment property, make sure you have a consistent and enforceable rent collection policy in place. Once you have established the amount of rent that you’ll collect, you’ll next have to decide when that rent is due.
Deciding When Rent is Due
It’s fairly standard to have rent be due on the first of the month. This is when tenants typically expect they will have to pay, and it will cover the entire month that lays ahead. While there’s nothing wrong with having the due date be the 10th of the month or the 15th of the month, having your rent collected early in the month will allow you to plan your own finances a little better.
Make sure your lease agreement reflects that rent is due on the first day of the month. You’ll also need to decide whether it’s going to be on the first regardless of weekends and holidays, or if the rent is due on the first, even if the first happens to be a Sunday or a federal holiday in which banks are likely to be closed. You may want your lease to reflect that in such an event, the rent is due the day before or the day after. Or, you can say that it’s due on the first regardless of what day it falls on.
Allowing Grace Periods with Rent Collection
Once you have established the rental due date, you’ll need to decide whether you want to allow for a grace period. Some lease agreements will say that rent is due on the first, but that rent is not considered late until the third or the fifth.
In Virginia, grace periods are not legally required. If you decide to provide this benefit to your tenants, make sure your lease agreement clearly states how long the grace period extends and when rent will officially be considered late. You’ll want to be consistent about this. There’s nothing to gain from tenants believing they can pay at any point in the month that they want to.
Establishing Late Fees for Hampton Roads Rent
If the rental due date and any grace period is missed and rent is paid late, owners can charge a late fee. In Virginia, you are not permitted to charge that late fee, however, unless you have put that into your written lease agreement.
There are also limits to the late fees you can charge. The amount cannot exceed the lesser of 10 percent of the periodic rent or 10 percent of the remaining balance due and owed by the tenant.
We recommend that you collect rent on the first of the month, unless there’s an extenuating circumstance that makes choosing a different day better for you and your residents. Make sure your lease agreement reflects the entire rent collection policy, including the amount due, when it’s due, whether there’s a grace period, and what the late fees and other consequences will be for late or unpaid rent.
If you need help with rent collection or anything pertaining to Hampton Roads property management, please contact us at Doud Realty Services.