Property management is a well-paying business and a good income source for landlords. But the biggest stress for property managers, apartment managers and landlords is collecting rent from tenants on time.
Once the rent is past-due, the landlord starts evaluating whether or not he should continue his association with the tenant, pressurize him with warnings or late fees. If the rent is further delayed then should he serve an eviction notice?
Even after the tenant leaves, the property may require fixes, painting job and finding a new tenant. All this can lead to at least 30-60 days of further loss of rental income.
Tenants often do excessive damage to the property. They are supposed to bear the cost of fixing it. Unfortunately, many tenants don’t pay, simply walk out the door and become untraceable too. Property damage costs are tough to recover.
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Debt write-offs are common in the property management business. But it can be minimized by having a proper accounts receivable plan in place.
Have you already sent late rent notice, made phone calls, even imposed a late fee and nothing seems to be working? Or may be the tenant has been evicted and is untraceable now. Not sure what to do next?
Involving a Rent Collection Agency at the earliest will improve cash flow and mitigate the risk since they are experts in collecting money. That’s what the debt collectors do all day long, every single working day of their life.
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Involvement of a rent collection agency is a game-changer, not only collectors can 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 severe. He is more likely to settle past-due rent compared to when the property manager was trying to handle things all by himself. The financial situation of a defaulting tenant deteriorates quickly. Therefore it is essential to act fast.
You will get more time to focus on your property management business while the collection agency works hard to recover your money.
Three primary services which collection agencies offer are Collection Letters, Collection Calls and Legal Suit.
Tips for Selecting a good Rent Collection Agency
1. A collection agency should attempt to collect the rent diplomatically without damaging the tenant and owner/manager relationship. They should be well aware of debt collection laws and professionally handle all debtor excuses.
2. It should be able to perform collection activity on tenants of single-family homes, retail shops and apartments. If the unfavorable financial situation of the tenant is temporary in nature, the debt collector will be able to negotiate and place the tenant under a payment plan so that all rental dues are settled amicably.
3. A rent collection agency should be able to provide a variety of payment options, including online payment, PayPal and wire transfer. 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 generally go for intensive collections directly. This includes Collection Calls or a legal suit.
5. A collection agency should have an online client portal using which a property manager should be able to stop the collections activity if you want. Provide backup documentation to the debt collector when the need arises, monitor real-time performance reports and submit additional accounts online.
6. A collection agency should have an effective method for tracking down tenants who have changed their address and are untraceable using advance Skip Tracing methods.
7. There should be a clear accounts receivable strategy with no exceptions. A collection agency should convey to the property managers and owners the importance of assigning the accounts early rather than repeatedly falling back on the inner feeling that the rent may get paid next month in full.
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 rent collection agency on time, owners will see an increased rate of return on their past due accounts.