Attention Landlords: Don’t Make These 5 Collection Mistakes
Categorised in: Our Blog
Before the pandemic knocked the U.S. economy sideways, a tenant who paid late was likely a frustrating yet rare occurrence. Now eight months into the crisis with no end in sight, unpaid rent may be a lot more common.
At Summit A*R, we’re commercial and residential tenant collection experts, but we understand tenant debt recovery doesn’t come as easy to everyone else — especially not now that we’re in uncharted territory. Without professional experience like ours, you could be inadvertently making it harder to collect rent by making these common mistakes.
Mistake #1: Making Assumptions
“No news is good news.” In a normal year, these may be words to live by as a landlord. After all, radio silence isn’t usually a cause for alarm. Most tenants only reach out when they want you to repair a leaking faucet or broken water heater so, you can safely assume that all is well in between these calls.
But this is a dangerous attitude to have while living through the pandemic.
If 2020 has taught us anything, it is that life is unpredictable, and things don’t always go according to plan. When it comes to your tenant’s financial situation, you can never be absolutely sure of anything until you ask.
By being proactive and starting the conversation, you can touch base with your tenants to see how they’re fairing.
If you’re lucky, they’ll remain unaffected by the ongoing economic impact of the pandemic. However, if they are dealing with significant financial difficulties due to COVID-19, your conversation comes with the following benefits:
1. An early warning
When the first day of the month rolls around, and you don’t have rent in your hand, you won’t have to chase after your tenant. You already know they can’t pay, so you’ll save time and frustration when you’re in possession of all the facts.
2. A plan of action
Once you know your tenant can’t pay, you can start brainstorming ways you can collect rent in a way that’s mindful of your tenant’s situation.
- Agree that some or all of their second stimulus check (if approved) will go toward rent.
- Arrange rental payment plans, partial payments, or lease amendments — this last one is feasible if you have a federally backed mortgage.
- Research non-profits that provide relief to tenants who can’t pay rent.
Mistake #2: Inconsistency
If you own a large apartment building or several properties, you may not be dealing with one tenant who can’t pay the rent but several. In this case, don’t play favorites. If you provide information or relief to one struggling tenant, provide it to all of them.
This approach helps you collect rent without being the bad guy. It eliminates any animosity should your tenants talk to each other; their chat will reveal you aren’t cutting anyone a better deal.
It also helps you keep your records straight if you end up organizing a rent payment plan. Like so many things in life, tenant debt collection benefits from a consistent approach.
Mistake #3: Failing to Document Communications
As a landlord, you run a business, and proper file management is part of the job. Maintaining organized files may save you a huge headache when tax time arrives or if you’re ever faced with an audit, claim, or legal dispute.
Keeping your records up to date will also help streamline your approach to the pandemic. You’ll want to make sure you keep records of the following information:
- Correspondence between you and tenants (including email, texts, and letters)
- Any changes or updates to the lease or rental agreement
- Rental ledgers (including payment records and copies of checks)
- Lease violations and corresponding action records
Don’t take anything for granted. While the arrangements you have with your tenants may seem obvious from your point of view, they may be incomprehensible from an outside perspective. Get things in writing, and keep it clear and concise just in case things go sideways — whether it’s due to an audit, legal proceedings, or you hire our tenant collection services.
Mistake #4: Ignoring Local Regulations
At the beginning of September, the Center for Disease Control and Prevention made news with a country-wide moratorium on evictions. Lasting until the end of the year, the ban protects millions of renters whose lives were upended by the pandemic.
The moratorium, which is still making headlines as some landlords find loopholes in the order, is one of the most well-known new laws in effect, but it’s by far the only policy landlords need to be aware of.
Your state and local municipality may have unique regulations that you need to accommodate. Take the time to get familiar with all local, state, and federal laws before you do anything else.
Pay particular attention to whether you can ask for verification if a tenant cannot pay their rent due to COVID-19. This documentation protects you from being taken advantage of, as only tenants that can prove they’ve lost a substantial amount of their earnings will be able to defer their rent.
Asking this may seem like a no-brainer, yet it could get you into legal hot water because it’s illegal to require this documentation in some cities.
The same goes for setting up a payment plan. Although it may seem like you’re doing your tenants a favor, you could get in trouble by getting them to sign a document to that effect.
Mistake #5: Going it Alone
To be blunt, it’s a challenging time to be a landlord. With 40 million people out of work, it’s likely at least one of your tenants may not be able to pay rent for reasons outside their control. While new regulations protect these tenants, many small-to-medium-sized landlords don’t qualify for similar protections.
You want to be compassionate, but you can’t waive rent forever.
With all this going on, it’s natural to feel overwhelmed. If you feel as though there isn’t anywhere else left to turn, get in touch with us here at Summit A*R. As the best collection agency for landlords, we’re on your side at every step. We treat tenants with dignity and respect, but our goal is to help you collect the money you’re owed.
Why choose us when none of your usual tricks work? As you can see from our FAQ about debt collection, people are more likely to cooperate with a debt collection agency. That’s because your tenants know we can affect their credit history, and we have other methods (like legal action) to secure payment.
Fortunately, this fifth and final mistake is the easiest to correct. If you want to put a stop to late payments, all you have to do is pick up the phone or send us a message, and one of our tenant debt recovery experts will be happy to help.
While COVID-19 may have transformed the economic climate, recovering difficult debt has always been part of our business-as-usual. Partner with us to recover overdue rent and recover some normalcy for your rental business.