A guest post by Jolene Sopalski
Many of us are afraid of confrontation with our residents regarding the ever-sensitive subject of delinquent rent. I think many of us are afraid to push our residents to pay rent for fear our customer service score will fall below the company expectations. But is this thought process really helping us achieve the ultimate goal; having a low delinquency that will help increase our economic occupancy?
How can we effectively collect on delinquent rent yet at the same time still give good customer service?
First, everyone needs to remember we are running a business. Our owners expect us to work in their best interests, which is making sure the rents are collected. As Ross Blaising says: “You have to think like and act like an owner.” Understand every decision through the lens of risk and reward. Ask yourself: “If these were my dollars at risk, what would I care about?” And then make decisions accordingly.
With this in mind, how would you want your rent collected?
Not everything is always sunshine and roses. Sometimes you just have to be the thorn!
Before you say: “Well I will do everything the legal way: the 3 Day Legal Late Rent Notice, contact three times and then file evictions.” think about the cost of sending someone to evictions. If you do nothing but the basics all because you are afraid of confrontation and not promoting excellent customer service, then you just hurt your owner. If a full eviction cost $523 (based on my attorney fees) and you file on 10 apartments a month, which is $5230.00 in legal fees if these apartments go to full evictions. Then there is the loss of income that is happening for the next 60 days on a unit that you could have already turned and put another paying resident in. Now, we are losing rent on a unit with an occupant that is not paying rent and have just cost our owners thousands of dollars because of the fear of the unknown. I don’t know about you, but if I was your owner I would be asking you to find another way to collect on the rent, clear up delinquencies and avoid evictions.
How can we effectively collect on delinquent rent?
Be firm in everything you do and don’t back down when talking to the residents. It takes a lot of dedication and hard work to bring a property delinquency down. Trust me, I know. I took a property with a high delinquency of $25,000 at close out, down to $767.00 in delinquencies at close out. This was not done by being fluffy and nice. I did not go to my residents’ doors with roses and ask for their rents.
Step 1: Send out a Late Fee Policy/Warning Notice to everyone on your property reminding your residents of when your rental payments are due.
Step 2: Don’t accept Promise to Pays after the 15th. You can require they attend a financial class in order to receive the PTP. This is going to be beneficial to your residents and to you. They will grumble and say it is unfair but in the end they will thank you for it.
Step 3: Charge back the monthly concessions given to move in as long as you have a concession addendum. It is a privilege to have a concession; they need to pay rent on time in order to receive it.
Step 4: Call, text, email and knock on their door every day. Deliver the 3 Day Legal Notice personally to their door.
Step 5: Putting a warning door hanger on their door, letting them know that evictions will begin within 24hours.
Step 6: Get bold! Put up a bootleg sign out front letting the residents know that evictions will begin today.
Remember, you are running a business and the goal is to collect the delinquent rent. Always keep your voice tone even, and never raise the tone to match the resident’s when they are screaming at you in your office. I had to learn this the hard way. My rule is: you do not enter my office unless you are going to be calm…and it works! Sometimes tough love stinks at the beginning. I won’t lie. You will lose residents who are always on your delinquency list, but the ones who want to stay will shape up and prove to you that they can pay on time. This may be because they get tired of seeing your love messages. When they do pay on time, make it a point to thank them by phone or with a card. I call this “Jolene” brand of customer service. Remember you are to act and think like an owner every day you go to work. Owners don’t want delinquent rent. So start thinking like one and collect the rent.
Now I want to put this discussion out to you readers. What are some other effective, firm, and creative ways you have used in dealing with a delinquency and collecting rent?
Be sure to check out Jolene’s Facebook page FLY Apartment Leasing Ideas for great multifamily conversation!
Jolene is the Imagination Guru at FLY Apartment Leasing Ideas, an assistant community manager at an affordable housing community in Jacksonville, Florida and the mother of three beautiful children who are the source of her inspiration. She has a passion for the multifamily housing industry and blogs regularly on multiple industry sites.