Managing delinquency is critical to a multifamily community's ability to function. Let me let you in on a secret, there's no magic account with an infinite amount of cash stashed away to manage and maintain communities. Communities function on collecting rent, PERIOD. Rent payments cover salaries, utilities, vendors, repairs, and all other operating expenses. This is why effectively managing delinquency is critical to its success. Because of how critical it is I want to share a few tips on how to keep your delinquency low and your cash flow high!

Let's get started — You want to make sure that you partner with a local landlord/tenant attorney. There's absolutely no way to effectively manage the delinquency process without one. In a perfect world, everyone would pay their rent in full and on-time monthly however, that's just not the reality. You will run into residents who fall behind and a few who will stop paying altogether.

Partnering with an attorney with help you swiftly navigate through the legal processes, minimize bad debt, and/or help you get payment or possession back as quickly as possible.

Oversight — Assign a person or a role to manage the process and another to oversee it. This is important for a few reasons: consistency, building relationships/establishing rapport, and accountability just to name a few.

Delinquency should be always the top priority for one onsite team member. That team member would need to actively manage this daily. Between follow-ups, processing payments, and legal proceedings there's a lot to be done all of which are critical to cash flow and operations. Another team member or someone in a leadership role should oversee the process, provide resources and assistance, in addition to accountability.

Now, although you've appointed one person or role to manage the process, and another to oversee it, it's also a good practice to get everyone involved with collection efforts. Train everyone in the office on how to politely remind residents of their outstanding balance and ask for payment during their interactions. Having everyone on the same accord increases your chances of collecting all outstanding balances while also "training" your residents to pay their balances in full and on-time monthly.

Following up — Make sure your team follows up on outstanding balances a minimum of 2–3 times per week utilizing various methods. Phone calls, Emails, door notices, text messages, door knocks, emergency contacts, and occupancy checks are all great follow-up methods.

Utilizing various methods serves as a great way to track down and collect payment from those difficult residents, in addition to aiding with the overall legal process. Also, it's a good practice to document all follow-up attempts in a centralized location assessable to all team members. This will help with intraoffice communication and ensure that everyone's on the same page.

Legal Proceedings — You want to make sure that you're initiating your legal proceedings and charging late fees monthly. It sounds harsh but it is what it is. The eviction process is a process, and it doesn't happen overnight. In some states, it can happen in a month and in others, it could be a year. This is a step that you do not want to miss or delay because it could end up costing you thousands of dollars.

This is also a great way of "training" your residents to pay on time monthly AND it serves as an additional income stream for your property! You're also increasing the value of your community by adding an additional stream of income!

Partnerships — It's super beneficial to partner with local/county government and charitable organizations that have homeless prevention programs. Programs like this were created to help residents who just simply fall on hard times and need a little assistance getting back on track to avoid losing their homes.

This is super beneficial to both your residents and the community. Your residents typically receive some sort of financial assistance to help get them back on track while you're lowering delinquency and keeping cash coming in while maintaining occupancy. Talk about a win, win situation for everyone!

Proactive Approach — Send and post rent reminders twice a month. First, on the last day of the month, and the second on the day before late fees are applied. You'd be surprised how many residents simply forget to pay their rent and taking a few moments to send reminders will help those residents and your community!

Bonus — Incentives are always a good idea! Create an incentives package for your team based on delinquency percentage and amounts collected. Offer your team an incentive for their collection's efforts.

Some companies offer a bonus for zeroing out, some offer bonuses based on month-end delinquency percentage, and some do a combination of both. Incentivize your team and watch your collections and cash flow begin to increase.

Now, let's keep one thing in mind. The goal is to collect rent while maintaining occupancy. You want to make sure that your team members are always providing excellent customer service, regardless of if a resident is current, or behind.