The everyday activities of handling multi-family property management combine for one primary purpose: obtaining rent. Collecting rent can be challenging and frustrating for property managers at any time, but it is notably more challenging at this time, due to the recent increase in unemployment rates and uncertainty as to eviction moratorium policies.
When addressing these issues, it is better to do a little each day to streamline your rent collection process, rather than wait until it has hit a critical level. Here are some tips on how you can accept the role of daily rent collection.
Establishing Policies on Successful Rent Collection
Rent collection does not begin when a resident moves in, but rather when drafting your leases and reviewing them with your resident at signing. All processes, due dates, penalties, and requirements for rent collection should be stated clearly in their lease agreement. After you review these policies with the resident, they will sign and consent to them. It is important to go over ALL policies and guidelines and make sure the resident understands them. Most lease agreements include individual initial boxes to ensure that the guidelines are understood.
In addition to developing clearly defined protocols, every resident should be treated uniformly, without fail. To uphold the requirements of the Fair Housing Laws, you’ll want to avoid acts that could be viewed as favoritism, such as allowing certain residents to disobey the rules.
Do’s and Dont’s of Collecting Rent
- Ensure the tenants have a good understanding of the rent collection process from Day 1. Have your leasing agent read the policies verbally, and have your resident initial each portion.
- Give notice a few days before payment is due for the first month or two that the resident is in the community. This helps to build healthy habits.
- Reward residents who pay the rent on time regularly. You can do this by offering discounted rent for a month or holding a raffle in which resident’s names are entered to win different prizes.
- Follow up on any outlined policy consequences.
- Be fair in implementing the policies and procedures for rental payments/collections.
- Offer an automated or electronic rent collection system, such as direct deposit or online payment options via credit card.
- Prescreen your residents and consider their past payment history. A screening tool is just one tool available to consider a prospect’s financial situation – talk to the potential resident regarding their source of income, other debts, etc.
- Hold rent payments longer than a period of 24-48 hours. Delaying cashing checks before ALL the payments are received in the complex is not beneficial. Try to get checks deposited regularly.
- Enable rent deductions. If repairs are needed, manage them by yourself, through your approved contractors or maintenance staff. Allowing reimbursements to reduce a resident’s rent is a bad idea.
- Make a habit of law-bending. Residents talk, and if you bend the rules for one resident, word will spread quickly, leading to bigger issues regarding payments. This can also contribute to Fair Housing problems if one resident is allowed to pay late without any penalty, while others are penalized.
- Accept multiple checks from one unit. If you are dealing with one apartment with several students or family members, it is safer to make them pool their money and pay with ONE payment form.
Good Practices for Multi-Family Managers to Tackle Late or Missed Rent Payments
If you’re involved in the property management industry for more than one month, you’ll be dealing with late or missed payments. Late payments cannot be avoided, so it’s best to explore and learn how to fix these problems.
If a resident is consistently late paying rent, offer to sit down and discuss matters. Ask questions such as:
- Why is the rent late?
- Can you make a payment of any amount today?
- How will you pay for the balance?
- How can this be prevented in the future?
This conversation does not need to be confrontational or aggressive. The goal is to get a better understanding of why late payments are happening, and what can be done about it. If the resident is going through financial hardships, be compassionate but firm. In any situation, listen to the resident and try to reach an agreement moving forward.
By following the advice above, you should begin to see a decrease in late rent payments at your property. Remember: consistent communication is key to having positive results with your residents.