How much is not enough?

While the talk is all there, not everyone's market of employment and housing is rebounding as well as we would all like. I am curious as to what type of regulations and requirements everyone has for rent collections. Are you accepting only "Payment in full" or are partial payments ok too? Is there a certain percentage of the balance due that you require? A certain deadline during the month before you require the current month's ledger paid as well as the next month's as well? How well are you doing with your current collections and what would you like to see re: changes?
I am looking into revamping a current system and wanted to obtain some feedback from my favorite peers.
As usual, thank you in advance!

Tara,

This is a great question! For the most part the rule of thumb is payment in full including late fees and other monies owed by the end of the month. Usually our managers will set a firm date such as the 15th or the 20th, with the understanding if payment is not paid in full then they will begin eviction proceedings. Payment arrangements are usually done with residents once or twice during their lease period.

If you have a resident who is continually late with their rent, they may not be able to afford to live at your community at this point you may want to discuss with them transferring to another apartment that costs less or non-renewing their lease agreement.

In some states, if you continually accept partial or late payments from residents for a particular time period it can override the terms stated on the lease agreement. So you may want to do some research into this as well.

This depends--I think collection laws vary state to state and possibly within counties or municipalities. When I was working in Ohio, we wanted every penny of rent and utilities by the 5th and didn't accept anything less. Late fees started on the sixth, increasing daily, and if you were late the late fee had to be included as well or we wouldn't accept payment. If we didn't have all monies owed by the 15th of the month, we began eviction proceedings (adding court fees to your total charge), and that moved along pretty fast--you could be evicted within six weeks of the first day of the month that you didn't pay. Ohio is pretty economically depressed and this was a harsh system for our residents, but the company owner was pretty happy when he saw how much money he was making based on late fees.:dry:

Now I'm in Maryland, and we collect rents within $100 of the amount due. Our county law says that residents have until the 10th to pay and residents usually have two months of non-payment before we start eviction proceedings. Late fees are a fixed percentage of the rent and we are very limited in the amount of court fees that we can pass on to residents once we file--again, based on county law. Even then, eviction proceedings are slow as molasses and we could have more than three months between getting a writ (?) to evict and actually getting a bailiff date.

Moral of the story is...check with a lawyer who is familiar with the local housing jurisdiction codes. In some places, partial payment is considered "payment" and you wouldn't be entitled to the remainder; in others, turning down a rent payment within a certain amount owed may be grounds for "rejecting" payment and you could get in trouble for that too.

Awesome topic! I would say that of course we should ALWAYS enforce our rules and regulations of collecting the rent timely, and if late that the appropriate fees are collected as well. However, we all know that the world is facing a huge economic crisis, especially in certain markets more than other. So, my advice would be to evaluate the market of the community. See what the current unemployment rate is and evaluate your tenant base. If unfortunately the property is located in a market that is simply suffering, then I would suggest a more lenient approach to collection. For example, I would still send the appropriate late notices and access the charges, but I would consider putting the resident in a legal stipulation agreement for 60-days in which a bi-weekly payment would be required. If for any reason they default from that agreement, then my attorney can instantly file eviction proceedings. This is the best way to handle partial and payment arrangements, it must be in a legal format, or you can easily loose control and end up with a horrible delinquent community

Thank you Pedro, MJG, and Angela for the comments. I think the name of the game is how adaptable are your collections methods as compared to the climate of your resident base. In our current and shifting market economy, bringing home the benjamins is the name of the game and I'm curious to see how many companies/properties are adjusting.

Hi Tara,
I agree with the folks above! I think Pedro hit the nail on the head~~a lot depends on what is going on in your market. Sending/filing all appropriate notices is absolutely necessary or you will have no recourse if the resident does not pay. A 'Rent Reservation' letter is also a must.

If our delinquency is high, then I think we must re-evaluate our move in criteria. When we lower the credit score that we will accept, and lower the income requirement, we are asking for trouble. When we give one month free as a concession (& it is the first month of the lease) and a $99 security deposit we are setting our property up for a higher delinquency!

And finally, we, as Property Manager, are not running a social service agency! We have a responsibility to our owner to maximize our income!! If we work with folks, we must have safeguards in place so we can evict when necessary.

We collect not only rent, but all utilities (electric, water, trash and gas), which can prove challenging. My total delinquency closes out, on average, at only 0.35% - 0.50%. The most successful tool I have found is using a "Promise to Pay Agreement" where the Tenant will provide the dates and payment amounts to have the account resolved by the end of the month.

I DO NOT carry over negative balances to the following month. "Snowballing" delinquencies will only get you into more trouble with the Tenant. I approach the Tenant in a more teamwork oriented fashion.... "How can we work on resolving your ledger balance, I want to help you out the best way possible."

Attacking a Tenant never works. If they feel you want to work with them and are part of their Team, they are much more apt to make payments on time. Late payers should always pay with Certified Funds (cashier's checks or money orders).