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Any suggestions on collecting on balances for damages, on both current and past tenants? besides the obvious.. thx

(please keep in mind these are affordable properties)

Collecting balances for current and previous tenants are two different matters.

For current tenants I recommend never allowing a tenant to become two months behind in rent. When a tenant is allowed to go two months the chances he will catch up are slim. Most likely he will either skip or be evicted owing you a lot of money. You mention damages. If a current tenant damaged my property he would either pay to have it repaired or leave regardless whether the unit was affordable or not.

For previous tenants you have three choices to collect debt.

1. Court- Depending on where you are, and the specifics about the debtor, this option may not be worth the time and money you would spend going to court.

2. Hire a collection agency- If you do hire one make sure you hire an agency that specializes in tenant debt. Know that all agencies are having a difficult time collecting in this economy.

3. Report the debt all three credit bureaus- This is the option I recommend in this economy. Report the debt and let it follow the debtor for seven years after move out. Eventually the debtor will have to clean up his credit report and pay you in order to obtain credit.

I have a lot more information on the subjects of tenant debt and screening at my blog. www.thelandlorddoctor.com

Good luck,

Bill Gray
The Landlord Doctor

For current residents, add the debt to their ledger. When they pay the dollars should go toward all fees first, late fee, legal or damage. That way they end up oweing RENT. And you can file a case for RENT!

For past debt, turn it over to a collection company.

Here is what I have done for debts owed by residents for damage they caused, the fact that the property is a market or an affordable property has no effect on the process:

1) Send a statement that includes the cost of parts/materials and labor to complete the repair. Have your service manager break down these costs for you. If you needed to contact an outside vendor for the repair (for example, a plumber); attach a copy of the vendor's bill. This actually did happen at my last property when a resident took it upon himself to 'fix' plumbing that was not broken (the property was less than 6 months old and he had only been there a few weeks); this caused over $600 in damage. Since this property was an affordable property; we allowed the resident to make payments on the repair. If the resident left owing money, we actually reported the debt like stated above.

2) If the damage is caused by a resident and not discovered until the time of move out, you are given 21 calendar days to account for any deposits on record. If the charges exceed the deposit; that notification turns into a bill that you can collect on and report to the credit bureaus. Say the resident placed $1000 on deposit, and damages were calculated at $1400; your notice would be a bill for $400. At the same time, if the damages were only $600, you would be sending them a check for $400. In either case, you need to send along a FULL accounting of the charges incurred.

It isn't rocket surgery (and I know a little about that).....

Depending on what state you are in, be careful applying rent payments to damages. In some tenant friendly states this can get you sued.

I recommend you talk with a local landlord/tenant attorney before you apply rent checks to anything other than rent.

Bill Gray
The Landlord Doctor
www.thelandlorddoctor.com

I have never applied payments to anything it was not intended for:

App payments get attached to app fees
deposits get attached to deposits
rent payments get attached to rent
damage payments get attached to damages

I also ask for separate funds for each; although I can accept them at the same time. Meaning if the resident has a $500 rent payment, and a $50 damage payment, I want 2 checks/money orders to pay for them. I will physically accept them at the same time. It just makes accounting easier. I also write on the check's memo line what the funds were for; so I have it when the checks get entered. When I accept checks throughout the day, I like to enter them at the end of it, and I might forget what each check was intended for.

Doreen,

Perhaps my response is an obvious method, but I believe it to be the most efficient and that is to communicate with your residents. Don't just send a balance due letter, follow it up with a phone call. It is easy to ignore a piece of paper, but not so easy to ignore you.

Of course, these communications should be courteous. Start by ensuring your resident understands the damage charges and then coordinate with them when you can expect to receive payment. Set a reminder for yourself either through your property management software or MS Outlook. If you have not received the payment as agreed upon, time to follow up again. Just as it is with leasing, collections require follow up, follow up, follow up.

Best of luck!