Wondering if partial rent payments make sense for your rental business? Learn the pros and cons and how you can support your tenants.
For landlords and tenants alike, life doesn’t always go according to plan. Maybe you’re still finishing maintenance work to your rental property on your tenant’s move-in day, or perhaps your renter isn’t able to pay their full month’s rent because of a sudden medical crisis.
In an effort to accommodate life’s unexpected moments, some landlords accept partial rent payments from their tenants. In this post, we’ll explore partial rent payments in detail, outlining their potential benefits and drawbacks — and how to best protect your investment if you do choose to accept them.
When a tenant makes a partial rent payment, they’re only paying a portion of their monthly rent. For example, if the monthly rent is $1,000, a partial rent payment may only total $500. That said, a partial payment could be any amount — it doesn’t necessarily have to be half.
Imagine this scenario: Your tenant’s rent is due on the first day of every month, but they can’t pay $1,000 in full between the 1st and the 10th — the grace period you had set for rent collection. Instead, they pay $300 on the 1st and the remaining $700 on the 20th.
Suddenly, their partial rent payment crosses over into late payment territory. Because the second half of this partial payment comes outside of the grace period you had set for accepting rent, it’s considered late — and may come with a late fee, if one is outlined in the lease.
Tenants have many different reasons for asking their landlord to consider a partial rent payment. These include:
Despite all these reasons, there is no rule about whether or not landlords have to accept tenants’ propositions for partial payments. Instead, landlords get to decide whether or not they are willing to accommodate their tenants’ needs and accept an incomplete payment.
There are benefits and drawbacks to accepting partial rent payments from tenants. Some of the most compelling reasons why landlords consider this method of rent collection are:
That said, there are certainly risks associated with partial rent payments, some of which include:
As a landlord, it’s always important to weigh the pros and cons of a potential decision and do what’s right for you. If you do choose to accept partial rent payments, consider following these five tips:
Communication is key. Have a conversation with your tenant about why they want to make a partial payment this month, and reinforce that this cannot become a recurring theme. Be clear about your deadline for the second payment as well.
If tenants are making partial payments outside of your typical grace period for rent collection, you may consider introducing a late fee. That way, tenants will be discouraged from resorting to partial payments too often. With Azibo’s streamlined rent collection platform, keeping track of late fees is simple. If your tenant has a balance after the due date and grace period, they will automatically be charged the full late fee.
As a rental property owner, you already have a lot on your plate. Keeping track of partial payments, late fees, and more across multiple properties — and possibly states — can quickly become unmanageable. With Azibo’s monthly rent dashboard, however, everything you need to stay organized is in one central hub. All your records remain accurate and up to date — saving you the hassle of manual recordkeeping.
Be mindful of local laws and how they affect partial rent payments and eviction. For example, in some jurisdictions, you may not be able to evict your tenant if they never paid the remaining balance of their rent. That’s why keeping accurate records is especially important; if you accepted a rent payment less than the full amount, you might have waived your right to collect full payment for that month depending on where you are.
Emphasize that partial rent payments cannot happen on a monthly basis — and take the opportunity to outline your late fee policy, as well. By clearly communicating with tenants in writing, you leave no room for confusion down the line.
Whether you decide to accept partial rent payments or not, a simple and streamlined rent collection platform is a must. With Azibo, landlords now have the option to enable partial payments and allow tenants to submit up to four payments toward an invoice.
The process only requires a few simple steps:
If you only want to enable partial payments for a single invoice:
Built for landlords, Azibo’s intuitive platform helps you streamline rent collection, mitigate risks associated with partial payments, and ensure your investments stay protected.
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