Managing rental properties comes with a host of potential pitfalls, and one of the toughest to avoid is the inevitable situation where a tenant falls behind on the rent and the amount owed to the landlord begins to climb.
Whether we are dealing with residential or commercial real estate, situations with delinquent tenants are always complicated, and they are often charged with emotions on both sides. In order to avoid finding yourself in a tough spot, we recommend following each of these six collection tips for property managers.
Screen Tenants Thoroughly
The best way to handle any type of delinquent tenant situation is to do everything in your power to prevent one before it happens. And the best way to do that is to make sure that you are always taking the time to properly screen each of your tenants before signing a lease with them.
Given today’s market environment, many landlords are often in such a hurry to get a lease signed that they are willing to overlook certain red flags, but that almost always ends up hurting them in the long run.
Have a Policy in Your Lease
The next thing that you can do to protect yourself before a situation develops is to make sure that you clearly spell out all of your expectations in the lease agreement that you sign with your tenants.
Every lease needs to state exactly what will happen if a tenant fails to make a rent payment, including how much will be expected in late fees and how long a tenant will have to get current before the eviction process is started.
Stay on Top of Potential Problems
Another thing that landlords can do to prevent situations with tenants from getting out of control is to stay on top of their tenants and make sure that those tenants are making their rent a priority.
Everyone knows that the squeaky wheel is the one that gets the grease, so the minute your tenants start to fall behind, make sure that you are on top of asking them for a plan to get current in a hurry.
Keep Detailed Records
When situations with delinquent tenants do spiral out of control, the landlord or property manager is almost always left realizing that they have incomplete records regarding any payment arrangements or offers that were made.
Any and all contact with tenants should always be documented and kept on file, regardless of how credible their efforts might seem.
Don’t Let Things Get Personal
Because property managers often have a personal investment in the property at hand, it can be easy to take signs of neglect from the tenants personally. While it is perfectly normal to have these feelings, you have to be very careful not to let them cloud your judgment regarding the collection.
No matter how you feel about the tenants personally, it is important to make the best of a given situation and find a way that earns the most money for the property in the long run.
Know When to Hire Help
In some cases, you might find that you are dealing with tenants who are professional rent dodgers. This could mean that you are drastically overmatched as these types of con artists often know every loophole in the book and will attempt to exploit their knowledge.
In situations like this, it can be a huge help to have an experienced professional working on your side, so this is an excellent opportunity to partner with a commercial debt collection agency.
No matter what type of real estate we are talking about, property managers are always going to have issues getting a small percentage of tenants to make their rent payments on time. But by following these six tips, you should have far less of those issues among your properties, which mean more time for you to relax and enjoy the fruits of your labor!