WHAT ARE THE TRICKS TO GETTING LATE RENT PAID?
A tenant owes money because their rent is late. TRUE OR FALSE: The property manager is responsible for rent collection so it’s their job to do all they can to collect that money for the owner that employs them? If you answered “true”, your enthusiasm can be commended, but regardless of what the task might be and who it might apply to (more globally than just property management), doing “all you can” is one of those phrases that can get you into trouble. If you’re looking to hire a professional property manager to service your rental property, you want a company that leans toward efficiency whenever possible. “Doing everything you can” is a great bar to set if we’re talking political ads or personal injury lawyer billboards, but a company eager to dive down the rabbit hole for individual needs is one that won’t effectively tend to the needs of the larger group and they will fail to provide consistent services. In a world where we’ve been conditioned to choose where to eat lunch because you can “have it your way” or “the customer is always right”, it’s easy to get caught up in the unrealistic expectation that professionals will bend to your every will and request.
The best companies out there build a solid systemic foundation squarely upon efficiency, and are also able to communicate effectively to show clients how this approach is in their best interest. Calling tenants for late rent balances isn’t efficient and doesn’t add value for clients. The best property managers don’t use the phone to chase late rent balances.
WHAT’S THE GOAL OF CALLING? WHAT ARE POTENTIAL OUTCOMES?
Calling makes sense to owners because it’s a seemingly easy step and it’s what we all would’ve done two or three decades ago. Someone owes you money, give ‘em a call and give ‘em hell…or find out what their story is. As humans, we naturally want to know the answer to “why?”. Ultimately what ends up happening more often than not is they give you a long drawn out excuse which wastes your precious time and pulls your emotion into the equation. You’ve lost efficiency and you’ve opened up a potential bias that can ultimately slow down your efforts. You need your rent money and learning that the tenant lost their job and has had a hard time getting a new one because their car is in the shop takes your eye off your business model. There are state laws that build in timelines so tenants aren’t getting evicted unfairly. So let’s run down the potential goals of an actual phone call and compare them to the alternative, an automated email message.
WHAT ARE THE TRICKS TO GETTING LATE RENT PAID?
There aren’t really any tricks because here’s the simple truth: tenants will pay the rent if: 1) they can (that is, they have the money) and 2) there are clear expectations and follow through if they do not pay. By making a phone call and opening yourself up to the tenant’s version of why they can’t pay, you’re naturally weakening their belief that you will evict in accordance with the timelines in your state. By reaching out in a move that feels like it is more likely to yield results, you actually weaken your position. At Nexus Property Management®, we hang our hats on building strong relationships with tenants and focusing on their happiness as a means for hassle-free, long-term tenancy, but when it comes to payment, there is no room for gray area. Consistent, emotion-free communication is key and the “trick” to that is utilizing email and avoiding the phone. At Nexus, if any of our 1000s of tenants are late paying rent, they’ll receive a daily email reminding them of their obligation to pay and steps to do so. We show that we care by providing the information they need in the most actionable way possible.
TOP 3 RENT COLLECTION MISTAKES LANDLORDS COMMONLY MAKE
Rent Collection is getting easier as technology improves but many landlords are stuck in their outdated ways. Make sure you're not still making some of these common mistakes:
1. ACCEPTING CASH
There’s no excuse for accepting cash as rent payment. Cash cannot be tracked and verified should a tenant claim they paid and you lost it. Do not accept cash!!!
2.GOING TO GET IT
It is your tenant’s responsibility to get their rent payment to you. If you go pick it up once, you can expect to go pick it up from now on. Going out of your way is as inefficient as it gets and shows your tenant’s you’re desperate and that they’re in charge. Don’t go collect the rent yourself!!!
3. ACCEPTING EXCUSES
Providing quality homes for tenants is a wonderful advantage of real estate investment. You can make money while improving someone else’s life…but it goes in that order. If they’re not paying, you’re not making the money your investment strategy depends on. We’ve seen owners forego eviction for months because tenants said they’d have the money soon and in the end the “excuse accepting” owners were out thousands of dollars.
LEARN MORE: TENANTS ARE BOTH YOUR CUSTOMER AND YOUR BOSS
Rent Collection is central to the ownership of any rental property. If you’re not collecting rent in a way that is consistent and efficient, you’re not maximizing your property’s potential and you’re likely inviting costly errors down the road. Reputable property managers have access to technology that makes rent collection and related communication easy and efficient. If you want the best tenants and reliable passive income while minimizing your risks, look into professional property managers in your area. If you’re looking for a property manager who takes great pride in their work and has over a decade of experience in the field, contact any of our Nexus offices across Arizona, Connecticut, Massachusetts, and Rhode Island.
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Mick Lefort is the General Manager of Nexus' New Haven County Franchise Office and the Vice President of Operations for Nexus Property Management®, a National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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