One of the most frustrating things dealt with as a property manager is a tenant who fails to pay their rent. While it is more common in lower rental housing, past due rent payments can happen with any type of property. As with most aspects of property management, having a plan in place is the key to resolving these issues.
During a recent interview with Mike Sargent, co-founder of HomeLovers in Glendale, AZ, he shared some of his insights into preventing and dealing with past due rents. He boiled his company’s successful program down to three components.
- “It is important that tenants are well-screened prior to putting them in a property.” Said Mike. “RealPage’s screening solution does a good job of that. Once a tenant is in, strict enforcement is critical. It is important also to encourage all tenants to interface through their portal.”
- “We make it very clear at lease signing that we are relentless at collecting late rent. There is a heavy penalty for being 5 days late ($100).” He continued, “This strict enforcement keeps most tenants thinking that the last obligation they want to ignore is their rent payment. We also train new tenants how to use their portal and create recurring payments.”
- He concluded with, “After we send a 5-day notice, we follow up with Propertyware conversations and phone calls. Since a high % of our tenants pay through their portal (85%-90%), our results are getting much better. Since the first of this year, the % of tenants who reach the 5-day late mark has shrunken from 6.8% to 3.9%.
You, too, can create a successful program to reduce the number of past due rent payments. Implementing a sound program is the first step. Once you have one in place and your past due results improve you will have time to focus on the more difficult situations.
5 Steps for Reducing Past Due Rent Payments
- Leverage online resident portals to increase compliance by promoting use of the portals. Resident portals provided by Propertyware allow for online payments and give tenants a convenient way to pay rent without visiting the post office.
- Provide multiple payment options. They are a plus for many tenants. Renters often find it easier to make two or more smaller payments rather than saving for one large payment each month.
- Offer and encourage recurring electronic payments. These are automatically transferred to pay the rent each month and eliminate the tenant’s need to remember to pay their rent.
- Set up automatic email alerts to remind tenants that rent is due or past due.
- Track communications with tenants to maintain your trail. This is another way that your tenant online portals and email system can help you. They generate an automatic record of your communications.