How are you collecting on your delinquent rent?

I just read a great article in July 2011 Units magazine by Paul R. Bergeron III called Enforcing rent payment deadlines is a critical step toward reducing resident delinquency. I loved everything that was said in this article, after talking to some other property manager friends in the area about how their collection efforts were going it was met with frustration. I personally think when you lower your standards to fill your vacancy units we allow for a higher delinquency therefore as it was stated in this article waste employee time chasing down the delinquent residents and at the same time it is pretty much blowing the budget. What are some ways that we can collect more effectively and not lose residents at the same time? I was thinking about creating a "Rental Payment Coupon Book" that had the online payment information and requirements to pay in the office, rental amount due on time, what the late fee and what the legal fee's are. I would give this to all new residents and residents who are renewing their lease. Another thing that I have started requiring my residents who are late and want a Promise to Pay to the 15th is that they attend the free financial budgeting class we have every month. If they do not attend this class then they will not get the Promise to Pay for the following month. Which means that at the end of the three day or ten day notice if rental payment is not received evictions will be filed. Which scares me because we are talking about allot of residents but at the same time I'm given a job to collect rental payments for my owners and they are the ones trusting me to do this. So what else have you done that you have found to work on collecting rental payments on time or before the eviction deadline?

Jolene: You have opened up a "can of worms" with me on this subject!! I am an advocate of NOT compromising your rental standards for occupancy! Period! This means the leasing agents will have to work that much harder to create more traffic for a qualified applicant pool. There is a service, not well known, called Neighborhood Pay Services that will garnish income from applicants that work and their employer allows for direct deposit. If you want more info, just send me an e-mail to [email protected] and I will provide additional contact info. This will allow for a management agent to take a higher risk applicant because the rent is garnished through their wages. Also, on delinquent households, I like to follow through to the judgement for a $$$$ amount. I like to use attorneys that also collect the bad debt. Once the judgement is received then that same attorney can take it through the collection process until collected. Very effective and possibility of a communication breakdown! Best Regards, Neil

Who can afford delinquency? As far as I know, most "Owners" have mortgages so we have to get payments on time.

We post "RENT IS LATE" door hangers, which enables everyone to see who was late. Residents who might be embarrassed about their late payment being advertised to their neighbors learn to pay on time very quickly! We post these the night before a late fee is applied, so the resident knows we are trying to help them avoid a fee. If a resident is late paying rent, the a $75 late fee applies.

If they don't pay by the 8th, we post a 3 day to pay or vacate notice.

On the 12th, we file for eviction and charge another $165. Fair housing laws prohibit exceptions on any circumstantial basis.

After the 4th late payment in a year, we post a termination notice. In my state, this notice does give an option to "cure" by paying on time for the next six months.

You are doing your residents a favor by educating them that rent should be a high priority, and keeping residents responsible makes for responsible neighbors.

I've noticed that at properties where deadlines were not enforced, residents do not care as much about the property, their neighbors, and having a peaceful community.

Did you make the rent is late notice door hangers or did you get them from somewhere?

I have problems with delinquents and I would like to try this!

I got them at Peachtree: www.pbp1.com/Property/product/RCEA224

Great American also has a variety of door hangers. My favorite is this maintenance one. www.gabpproperty.com/jumbo-maintenance-door-hanger/188


I'm not "crafty", but when I'm over budget for office supplies, I make door hangers myself.

I found a great sale on some bright card stock a while back and I picked up a doorknob sized hole punch at a craft store. I invested in a paper cutter a few years ago and it was very well worth it! The door hangers I made for Dog Barking Complaints came out very professional looking and are indistinguishable from the ones that the county provides (they left me some and gave me permission to use them.)

Going off-topic here but I want to mention that a paper cutter is a GREAT asset to a community. You can cut paper costs in half by printing general notices half-sized and cutting them yourself. :laugh: The smaller notices actually get a better response because they aren't the size residents are used to seeing (and ignoring.)

Okay I have to toot my own horn here and hopefully offer some helpful advice to others:

In the past 2 years I have only closed out 4 months with any delinquent rent at all. We actually had gone 14 months straight with zero delinquent rent until last month when I closed out with negative $50 . It didn't start out that way. I have been on this sight for 4 years and it took me 2 of those years to get to this point.
Here our rent is of course due on the 1st and late fees of 10% apply on the 6th. Our residents have been trained that rent is due on the 1st and LATE ON THE 2ND! Upon move in and lease renewal we remind residents of that. It's a bit of an obsession for me, I think I wake up at night saying "it's due in the 1st, late on the second" It states it in my resident newsletter and on the monthly activities calendar. I also thank residents every month in the newsletter for paying rent on time.
Now that is not to say I start out the month with no delinquent rent. I don't. Every month just like everyone else I have to fight for money, but only on a very small scale. I also work with some of my residents who receive SSI. Many of those checks are paid on the 3rd Wed of each month. I allow those residents to make their payments late, as long as I have it in before our close out of the 25th. To me that is a reasonable accomodation.
When I do have a resident who can not pay, I basically ask them to move ASAP. I would rather have them move out and a vacant apartment than to be paying utility cost for an aparmtent that I'm not getting rent on. To date I have only actually had to evict; for non-payment, 2 households.
I think our success is due to the fact that my entire staff knows every resident by name. Building that type of relationship is KEY. We spend a lot of time planning events for residents, and just taking a few minutes to chat with everyone we meet. While some people have no qualms about avoiding paying a business, it's harder when there is an actual person that they know and respect.

Kudos to all of the Property Managers who are able to collect 100 percent.

I have been a Property Manager for 12 years in NY,for the landlords here is a totally different ball game since the rent laws are so pro tenant and not even mentioning NYC L&T Court system,for an example, a Landlord is not allowed to ask for the rent if they were send an invoice, its harrasment, and if yoou dont send a bill and dont ask the tenant for rent in 3 months its called letches and the Landlord cant ask for the rent, because the Tenant might have spent the money thinking that the rent is forgivin.

So for me to get on top I send the bills by 25th of the prior month then on the 5th if anybody is late I check the Apartment if "everything is OK" implying that I understand the rent hasnt been paid and perhaps there is something wrong in the Apt that needs attention like repair or an issue, checking if they are still employed leaving it open for a discussion of the late rent.

Out of 700 units I manage, in last 2 years I was ble to collect 98-99 percent by the end of the billing cycle each ends on the 24th.

Good luck out there

My best advice is to know the law of the land you manage. Know what you can and cannot do, and hold people accountable. Everyone knows when rent is due, no matter what happened to their baby's daddy's sisters's cousin. If you don't pay at my community, you are evicted in a timely manner. If you are having issues, start taking more co-signers, this gives your someone else to call on if rent hasn't been paid.

I am interested in how others are collecting delinquent rent on section 8 distressed properties, specifically, apartment communities where the majority of the residents are young?

Things have changed a lot since I managed LIHTC with Section 8. You absolutely have to screen your tenants better. I currently oversee a community that I consider low income due to the rates we charge and the income required to qualify. We had terrible delinquency when we first took it over a year and a half ago. We had about 65% turnover last year.

Since we changed our criteria and charge higher deposits (at least one-two month's rent) our delinquency has dropped a lot. They don't want to lose that huge deposit.

What kind of relationship do you have with your local Housing Authority? I had a great one with mine. I sent tenants a late letter with a copy to H.A. I put in the late letter, that I was contacting H.A. and they were at a HIGH RISK of losing their benefits. I always hand wrote in big red ink "Can you help with this?" on the copy I sent to "H.A." Fax it to them, it gets there faster.

I also had a "3 strikes you're out" policy for filing evictions. The 3rd filing was the last.

I still use "Power Words" my late letters. For example: Instead of saying "We have not received your rent as of today." I would say: "Your rent is a week late and legal proceedings will be started in just 3 days." Make it so they can immediately and easily picture in their mind the seriousness of it.

Good luck!

Sandy