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Rent Payment Collection Best Practices

Last updated:1/15/2025

8 min read

PaymentRent CollectionBAHFinancialMilitary Tenants

Rent Payment Collection Best Practices

Understanding Military Pay Schedules

Military members are typically paid:

1st and 15th of each month (most common)
Or monthly on 1st (less common)

This affects when they have money available to pay rent and should influence your payment policies.

Payment Methods

Recommended Methods

Online Payment Platforms (Best Option):

Zelle, Venmo, PayPal, Cash App
Automated Clearing House (ACH) transfer
Property management software (AppFolio, Buildium, etc.)
Rent payment apps (RentRedi, TurboTenant, Avail)

Advantages:

✅ Immediate confirmation
✅ Automatic paper trail
✅ Easy for tenant to schedule
✅ Can automate recurring payments
✅ Reduces late payments
✅ No trips to bank

Best for Military: Set up auto-pay aligned with military pay dates

Direct Deposit/Bank Transfer:

Electronic transfer between accounts
Can be automated
No transaction fees
Safe and reliable

Personal Checks:

Traditional method
Requires mail time or dropoff
Can bounce (less common with military)
Paper trail for records

Certified Checks/Money Orders:

Guaranteed funds
Good for first month + deposit
Inconvenient for monthly rent
Small fee to tenant

Methods to Avoid

Cash:

❌ No paper trail
❌ Security concerns
❌ Dispute risks
❌ IRS reporting complications

Credit Cards:

❌ High transaction fees (2-3%)
❌ Encourages debt
❌ Chargeback disputes possible

Setting Due Dates & Grace Periods

Due Date Options

1st of Month (Most Common):

Traditional due date
Aligns with many leases
Standard expectation

Advantage: Universal standard

Disadvantage: Military paid on 1st may need grace period

15th of Month (Military-Friendly):

Aligns with mid-month military pay
Less competition for funds (bills on 1st)
Unique offering

Advantage: Guaranteed funds available

Disadvantage: Non-standard, may confuse non-military tenants

Flexible Within Range:

"Due 1st-5th" or "Due 1st-3rd"
Accommodates pay schedule variations
Shows understanding

Grace Periods

Standard: 3-5 days after due date

No late fee during grace period
Accommodates pay schedule delays
Builds goodwill

Military-Friendly: 5-7 days

Accounts for military pay timing

Auto-Pay Setup

Benefits of Automated Payments

99% on-time payment rate
Reduces landlord workload
Tenant doesn't forget
Predictable cash flow
Fewer late fees to collect

How to Set Up

Option 1: Property Management Software

TurboTenant, Avail, RentRedi, Baselane
Tenant enters bank account info
Auto-debit on due date
Notifications to both parties

Option 2: Bank Recurring Transfer

Tenant sets up in their bank
Scheduled transfer to your account
Free for most banks
Tenant maintains control

Option 3: Payment Apps

Venmo, Zelle recurring payments
PayPal automatic payments
Easy for tech-savvy tenants

Auto-Pay Best Practices

Set Payment Date:

If military paid 1st/15th and rent due 1st:
- Consider auto-pay on 2nd or 3rd (after pay clears)
Discuss timing with tenant
Account for bank processing time

:

Handling Late Payments

Step-by-Step Late Payment Process

Friendly Reminder (Grace Period)

Send friendly text/email on 2nd or 3rd: "Hi [Name], just a reminder that rent is due by the 5th. Let me know if you have any questions!"

Formal Notice (After Grace Period)

After grace period expires: "Rent was due on the 1st with a grace period through the 5th. As of today ([date]), rent has not been received. Per the lease, a late fee of $[amount] applies. Please submit payment immediately."

Follow-Up (3-5 Days Later)

Phone call + written notice: "Rent remains unpaid. Total due: $[rent + late fees]. Please contact me immediately to discuss. Continued non-payment may result in eviction proceedings."

Pay or Quit Notice (Per State Law)

Formal legal notice (typically 3-7 days depending on state): "You have [X] days to pay rent in full or vacate the property, or eviction proceedings will begin."

Eviction Filing (Last Resort)

File eviction with court. Note: For military tenants, court approval required under SCRA. Cannot do self-help eviction.

Communication Tips

Start Friendly:

Assume honest mistake

Payment Plans & Hardship

When to Offer Payment Plan

Appropriate Situations:

Medical emergency
Unexpected PCS costs
Family emergency
One-time financial hardship
Good payment history otherwise

Not Appropriate:

Habitual late payments
No effort to communicate
Poor payment history
Refusal to work with you

Payment Plan Structure

Example:

Rent: $1,500
Owed: 2 months = $3,000
Plan: $750/week for 4 weeks
Or: $1,500 + $750/month for 2 months

Put in Writing:

Amount owed
Payment schedule
Consequences of missed payment
When they'll be current
Late fees (waive or reduce if appropriate)

Sample Agreement:

"Tenant owes $3,000 (2 months rent). Tenant agrees to pay $750 every Friday for 4 weeks, in addition to current rent. If any payment is missed, full balance becomes due immediately and eviction proceedings will begin. Late fees of $150 will be waived upon successful completion of payment plan."

Record Keeping

What to Document

Every Payment:

Date received
Amount
Method (check #, ACH confirmation, etc.)
For what month/period
Running balance

Late Payments:

Date payment was due
Date payment received
Late fees charged
Communication sent
Tenant response

Payment Issues:

Bounced checks
Failed ACH transfers
Payment disputes
Resolution details

Record Retention

Keep for 3-7 Years:

All payment records
Lease agreements
Communication logs
Bank statements
Receipts

Why:

Tax purposes (IRS audit)
Legal disputes
Security deposit disputes
Eviction proceedings
Reference checks

Tools for Tracking

Property Management Software:

Rent Increases

When to Increase Rent

Timing Considerations:

Annual increase typical (3-5%)
After lease renewal
When market rates increase
After property improvements
When BAH rates increase

Military Considerations:

Check if BAH increased (usually January)
Don't increase solely because BAH increased
Good tenant worth keeping (turnover expensive)
Consider PCS timing (less likely to renew if increase too high)

How Much to Increase

Standard: 3-5% annually

Keeps pace with inflation
Covers increased costs
Market competitive
Reasonable to tenants

Example:

Current rent: $1,500
3% increase: $1,545
5% increase: $1,575

When to Increase More:

Significantly below market
Major property improvements
New amenities added
Market rent surged

Notice Requirements

Check State Law:

Payment Collection Best Practices Summary

Set Up for Success:

✅ Offer multiple payment methods (especially auto-pay)
✅ Align due dates with military pay schedule
✅ Provide reasonable grace period (3-5 days)
✅ Clear late fee policy in lease

Communication:

✅ Send friendly reminders
✅ Be understanding of military situations
✅ Document all communication
✅ Escalate gradually but firmly

Enforcement:

✅ Apply policies consistently
✅ Start friendly, get firmer if needed
✅ Know SCRA eviction requirements
✅ Work with command if appropriate

Record Keeping:

✅ Document every payment
✅ Track late payments and fees
✅ Keep records for 3-7 years
✅ Use software when possible

Flexibility:

✅ Consider payment plans for hardship
✅ Inform tenants of military relief societies
✅ Be reasonable with good tenants
✅ Strict with habitual late payers

Related Resources

Understanding BAH
Military Income Verification
Understanding Military Life
SCRA Explained
Security Deposits

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Especially if rent due on 1st (military paid on 1st)

Reduces friction

Example Lease Language:

"Rent is due on the 1st of each month. A grace period of 5 days is provided. Late fees apply beginning the 6th day of the month. Landlord acknowledges military pay is typically received on the 1st and 15th of the month."

Late Fee Structure

Typical Late Fees:

$50-$100 flat fee after grace period
Or 5-10% of monthly rent
Plus $10-25 per day after X days

Example:

Rent: $1,500
Due: 1st, grace through 5th
Late fee: $75 starting 6th
Plus $10/day after 10th

Check State Laws: Some states limit late fee amounts

Best Practice: Reasonable fees that motivate timely payment without gouging

Backup Plan

What if payment fails?
Notification system
Grace period still applies
Manual payment option

Communication:

Confirm payment received
Alert if payment fails
Notify of rent increases
Update details when needed

Military life is unpredictable

Deployment may have caused issue

Payment system may have failed

Escalate Gradually:

Don't threaten eviction immediately
Give chances to resolve
Document all communication
Maintain professional tone

Know Your Tenant:

Perfect payment history + one late payment = grace
Habitual late payer = stricter enforcement
Deployment situation = extra flexibility
Financial hardship = payment plan option

Military-Specific Considerations

Deployment Issues:

May cause temporary payment disruption
Spouse may handle payments
Bank account access issues
Consider short-term flexibility

Finance Office Problems:

Military pay issues do happen (rare)
LES problems can delay pay
Bank technical issues
Usually resolved quickly

PCS Delays:

Orders may change last minute
Payment disrupted during move
Usually resolved within days
One-time grace appropriate

Command Involvement:

Service member's command cares about financial responsibility
Chronic late payment affects career
First sergeant may get involved
Usually motivates quick resolution

Military Relief Societies

Resources for Struggling Military Tenants:

Army Emergency Relief (AER)
Navy-Marine Corps Relief Society
Air Force Aid Society
Coast Guard Mutual Assistance

What They Provide:

No-interest loans
Grants (don't need to repay)
Financial counseling
Budget assistance

How It Helps You:

Tenant gets funds for back rent
Prevents eviction
Retains good tenant
Military encourages using this resource

Automatic record keeping
Payment history reports
Late payment tracking
Communication logs

Spreadsheet:

Simple and free
Customizable
Manual entry
Good for small portfolios

Accounting Software:

QuickBooks
Wave
FreshBooks
Professional reports

30 days: Most states (month-to-month)
60 days: Some states, or if increase > certain %
90 days: Rare

Best Practice:

Provide 60 days notice
Explain reason for increase
Highlight value/improvements
Thank them for being good tenant

Sample Notice:

"Dear [Tenant], as we approach your lease renewal on [date], I wanted to provide advance notice that rent will increase to $1,575/month (3% increase). This increase reflects rising property costs, insurance, and taxes. You've been an excellent tenant, and I hope you'll choose to renew. Please let me know your decision by [date]. Thank you for your continued tenancy."

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