Collections

I am wondering how everyone is doing with their collections. I know where I am, the unemployment rate is very high and it is hard to get blood out of a turnip. Is it better to turn the account over to a company that gets paid only if they collect? Or would it be better to turn it over to a company that takes a smaller up front fee to report to the credit agencies? I have been an apartment owner for many years, but due to the market, I am having to learn how do this myself. Thanks for any feedback.

In Western North Carolina collections are okay--not good-just okay. We turn everything over to an agency as soon as folks move out and are owing money. I think companies that get a percentage work just as hard as the ones that only get paid if they collect. The big thing is not to have your sites acting as collections agencies. They have enough to do!

When it comes to collecting your money, the longer you hold accounts receiveable the less chance you have to collect. I have been help the Real Estate Industry for years collect "bags of cash." Also being an experinced investor helps me to understand your plight. I have attached a quick video that explains how I can help
transworldsystems.com/video/gogreen_video.html

Please feel free to consult my expertise to help you.
Jeff
1-877-MDU-ADVOCATE

In this tough economic climate, I am seeing more companies and landlords move to bringing their collections in house. I agree that leasing agents and property managers are not collectors, but why not add incentive to in house employees and give them a commission of 15-20% which is still less than what most third party collection agencies charge. There are skip tracing tools that are available to Property Management firms that are low cost. These same tools are what collection agencies are using to collect your debt today and you will usually pay them 40-50% in commission. If your third party provider is doing a great job then stick with it, but if you are not seeing the recovery you need then research the skip tracing solutions and put your best foot forward.

Chay Rankin

CBCAmRent
Resident Screening Account Executive
www.amrent.com
[email protected]

ProCollect, Inc. specializes in debt recovery for the multifamily industry and has since 1995. Our collections have improved in the midst of this economic downturn. Bob, even though I may have a biased opinion, I recommend using a professional 3rd party collection's agency such as ProCollect who specializes in the multifamily industry. We work on a contingency basis, so there is never a fee unless we collect.

Collecting in-house is not recommended. Apartment management personnel are already very busy and collections can be very time consuming in order to get results. This may take them away from more important tasks. There is very few people that can do well with in-house collections while maintaining all of their priorities. Yes, you get to keep all of the recovered money yourselves, but you incur the costs in the pursuit. 99% of the time, you will not come close to collecting more money than ProCollect would even after our fees have been taken out.

Collect more money, no costs incurred, free to handle more important tasks, and no headaches from being yelled at all day long or listening to truly sad stories about the reasons they could not pay.

Feel free to call or email me anytime if I can be of service.
www.ProCollect.com

Bring in collections in-house is generally not recommended as you might not realize the costs involved, nor the legal implications if done incorrectly.

What is better- a commission based collection agency that only gets paid if they collect or a fixed fee collection agency that is paid a small fee per account regardless of success?

Agencies that get paid a percentage of amounts collected can be good for a company that has a serious delinquency/skip problem- if they are so financially strapped they can't afford any other options. The main issues with these companies is you turn the account over to them for all contact (what do they say to your tenant to collect), when they make a settlement how do you know that settlement was the best amount that could have been recovered or if they were just settling the account to get paid- remember they only get paid if they recover an account, and lastly do they work all of your accounts with the same effort? Will they work an account that is $150 the same as they would one for $1500 or $15,000? Of course not, they will work the top $$$ accounts first because they make the most money on them. Do they give you 24/7 access to the status of the accounts you turn over or do they just send a statement of amounts collected monthly/quarterly and not address their recovery rate? They generally charge 25%+ per account and as stated before seek out the most profitable accounts.

Fixed fee agencies- First you must determine what is included in their service- are they only a letter writing service? Do they report the debt to the credit agencies? Do they make collection phone calls? Do they have an attorney demand letter included in the service? Do they do skip tracing to find the tenants new information? Or do they just write letters because if they only write letters what's the difference between them writing letters and you writing letters? Nothing.