Property management is a well paying business and a good income source for landlords, but the biggest challenge for both managers and landlords is getting rent from tenants on time. Once the rent is past due, a property manager starts evaluating whether or not he should continue his association with the tenant, or serve him with warnings or fines, and if the rent is delayed further then should he serve an eviction notice. Even after the tenant leaves, property may require certain fixes, painting job and finding for a new tenant. All this can lead to at least 30-60 days of further of loss of rental income.
Sometimes tenants do excessive damage to the property. They are supposed to bear the cost to get it fixed. Unfortunately many tenants don’t pay and simply walk out the door, often become untraceable too. These costs are tough to recover.
Debt write-offs are common in property management business. But it can be avoided or minimized by having a proper accounts receivable plan in place. Have you sent late rent notice, made phone calls, even imposed a late fee and nothing seems to be working? Or may me the tenant has been evicted and untraceable. Not sure what to do next?
Involving a collection agency at the earliest will mitigate the risk since they are experts in collecting money. That’s what the debt collectors do all day long, every singe working day of their life. Involvement of a collection agency is a game changer, not only collectors are able to use a variety of tactics and tools, but once your tenant knows that a collection agency is involved he knows that things have become a lot more serious and is more likely to settle past due payments compared to when property manager is trying to handle things by himself. You will get more time to focus on your property management business. Three main services which collection agencies offer are Collection Letters, Collection Calls and Legal Suit.
Check this: Cost of hiring a collection agency
Selecting a proper debt collection agency is important
1. A collection agency should attempt to collect the rent diplomatically without damaging the tenant and owner/manager relationship.
2. Should be able to perform collection activity on tenants of single family homes, retail shops and apartments. If the financial crunch situation of the tenant is temporary, he should be able to negotiate and place the tenant under a payment plan so that all dues are settled at the earliest.
3. Able to provide variety of payment options, including online payment. Collection agents should also have the ability to accept major credit cards and checks over the phone.
4. For eviction cases, a collection agency will normally go for intensive collections directly, this includes collection calls or a legal suit.
5. A collection agency should have an online portal using which a property manager should be able to stop the collections activity if needed, provide additional information to the debt collector if asked, see real time performance reports and submit new accounts online.
6. A collection agency should have an effective method for tracking down tenants who have changed their address and are untraceable.
7. Clearly convey property managers and owners the importance of assigning the accounts early rather than falling back on the inner hope that the rent may get paid next month in full. There should be a clear accounts receivable strategy with no exceptions.
8. Should report accounts to credit reporting agencies: Experian, TransUnion, Equifax whenever needed.
9. Provide a flexible strategy for both early stage and late stage (over 120 days past due). There should be no commission or contingency fee with their flat fee process.
10. No hidden costs or minimums and must have a national network of legal advisers.
By assigning the accounts to a collection agency on time, owners will see the increased rate of return on their past due accounts.
If you need a collections agency to take care of your account receivables: Contact us