The following COLLECTION strategy has worked multiple times with one landlord. He shares below how his “Sending Payment Plan Options” strategy to former residents who still owe money, worked out most recently.
Send Payment Plan Options to Former Residents
“I had a resident move out at the end of November and stiff me for proper notice, rent, and he also left some damages. The total due was just over $800. I sent a security deposit accounting to him and I also sent a copy “in care of” to all my former resident’s emergency contacts.
He called and argued a little bit in a voicemail. I texted him to explain why it was the way it was. I sent him AND ALL HIS CONTACTS another bill with a “FINAL NOTICE” in red, stamped at the top. I gave him an option to pay over one month with a 20% discount, two months with a 10% discount, or three months at the full amount due. I just got my first check today with him selecting to break it up over three months for a full payment.
No court, no judge, no judgment, no chasing. Now if he doesn’t pay me, I have proof that he admits to owing this money in the form of him selecting a payment plan. That would make a case even easier to win. I’ve had great success with sending a payment plan and multiple options for them to choose from before I even go to court with them. I’ve had tenants and Grandmas pay me too.”
Nearly $4,000 Extra Cash Flow to Allow a Dog or Cat
I noticed just yesterday that a landlord with rentals down the street from mine has started advertising that they accept pets. What really got my attention is that they are charging a WHOPPING $300 MONTHLY additional rent fee for either a dog or a cat. That’s $300 a month, or nearly $4,000 a year for allowing your resident to have one pet. I don’t know if that amount is common in your area, but if that is the going rate now in my area, I’ll be the first to admit that I must have been sleeping on the job lately when it comes to keeping up with market rates. Those kinds of numbers make me think twice about allowing pets in more of my properties. I encourage and challenge you to check what the going rates are for pet fees in your area. See what other landlords are getting in EXTRA cash flow by being willing to rent to pet owners.
Do You Cut Your Residents Any Slack?
Is there ANY justifiable reason for a resident not paying rent by the due date? And if there is, are you going to cut the resident any slack and not post the Pay or Quit notice as stated in your lease?
That question recently sparked one of the biggest discussions of the year thus far on the nationwide Landlord Forum. The following are two viewpoints on the topic, and the discussion included many variations of these two view
“If a landlord were to enforce every little detail of their lease, it would cause more problems than solving. It would also cause the landlord more stress than needed. It’s like everything else in this business: case by case. You’ll drive yourself and your residents nuts by being too rigid. Sometimes. Mainly yourself.”
“I ALWAYS enforce my lease… It’s black and white for me (no gray areas). I am not a social agency or a charity. Business is business. If I run into a problem and can’t pay for repairs, utilities, insurance, taxes, or the mortgage, I won’t get a break from those organizations.”
It’s Vital You Know As Much As You Can About Fair Housing
I actually had a fair housing complaint filed against me for the first time last year. A complete investigation was conducted over several months followed by a hearing. The accusation was not done by someone applying to the property who felt discriminated against, but by a resident who had moved into the property. Truth be told, from what I have learned from the experience, many landlords could be in BIG (and very costly) trouble with Fair Housing if accused, not because of the things you are doing, but because of what you are NOT doing.
Many landlords think that fair housing accusations only occur with rental “applicants” who feel that they were discriminated against. The accusations I faced were done long after the screening process. They involved concerns by actual authorized residents, not about the screening process, but with other circumstances that took place AFTER move-in, months into the rental relationship, and again even toward the end of the rental relationship. I will be conducting an entire special workshop at this year’s LandlordConvention.com on this matter.
I’ll just say this for now: If at all possible, I would NOT handle ANY matters on a case-by-case basis. Everything done needs to be part of your policies and procedures, even exceptions to the rule should be accounted for in your policies and procedures. And all your policies need to be in writing, even the policies most landlords have not even stopped to consider, much less write down.
Be sure to attend any meeting put on by your association regarding Fair Housing. If you are not taking the time to learn what you need to know and do regarding Fair Housing, you as a landlord should be absolutely terrified about violating Fair Housing laws. I know that some of what I have learned and share could literally save you tens of thousands of dollars if you find yourself facing an accusation.
Mail Monthly Statements
One landlord has had a lot of success getting residents to pay their rents on time by sending them monthly statements and he encourages other landlords to consider sending them to their residents. The following is the tip he suggested: Do you mail monthly rental statements/bills to your residents? I do. I have 11 rentals. I think that “every battle is won before it’s fought”.
My rental market is mid to low blue collar, a suburb of the major city. Each month I send a detailed rental statement, along with a return address envelope for residents to mail rent. This is no different than any of their other bills, like their cell phone, cable TV or electric bill. So why not a rental bill? I show charges like repairs, a cat or dog fee, alarm fee, water bill, etc. This eliminates any discrepancies when it comes to how much is due and why. In the past four years I’ve never gotten into a “he said, she said” over rental charges with my residents.
Facebook Can Help You Collect Money Owed
A landlord shared a tip on how checking Facebook helped him begin collecting some of the money owed by a former resident:
“I’ve got a 3-year old judgment for about $3,000 against a couple. I previously filed a garnishment against the husband but I received no funds because child support withholding is already above the state maximum garnishment rate. A few weeks ago I looked at the wife’s Facebook profile. She had previously been a stay-at-home mom but Facebook events showed that she ‘started a new job. Cha-Ching! So I got the first garnishment check today – $97.63.”
Do You Own Multi-Family Properties?
If you own multi-family properties, expand your revenue thinking. Always be open to considering non-traditional ways to increase your cash flow. Here’s one way that could work well in a high populated area where parking is in high demand. Many of you have heard about Airbnb. But what about Airbnb for parking?
Extra Dollars In Your Parking Lot: Your parking lot might be fully leased out, but are the parking spaces always occupied, especially during the day when people are working? There are several companies out there trying to get into “Airbnb for parking.” These companies will put their sophisticated software and smartphone apps into place at no cost to the landlord, then profit-share the additional revenue they generate. A few of the companies doing this are
: ParqEx., SpotHero, and Parkwhiz.
The above tips are shared by regular contributors to the popular MrLandlord.com Q&A forum, by real estate authors and by Jeffrey Taylor, Founder@Mrlandlord.com. To receive a free sample of Mr. Landlord newsletter, call 1-800-950-2250 or visit their informative Q&A Forum at LandlordingAdvice.com, where you can ask landlording questions and seek the advice of other rental owners 24 hours a day.