Collecting Rent


#1

I’m about to take over management of a 210 unit park, and one thing I feel is that the old management spends too much time collecting back rent. Believe me, they collect it and every penny of the late fees, but it seems to me they spent a lot of effort doing it.

Here in South Dakota if somebody breaks their lease by not following the rules or pays late, we have the option of cancelling their lease, which gives them 30 days to move out (way easier than an eviction process!) Here’s how I propose to ease the burden of collecting back rent, and maybe you all can tell me if I’m smoking something or what.

First, rent paid before the 10th of the month is not considered late. I’m fine with that. Then on the 11th, a $10 late charge is assessed plus a fee of $4 per day.

Here’s what I’m thinking. If someone knows they are going to be late in paying, they need to come to my office and fill out a paper that states they intend to pay late and outline a plan of getting caught up. I then have the option of approving or denying the plan. Both parties sign the paper. No late fees will be waved. If they fail to follow their plan or miss anymore rent payments, then I send a warning that they have 15 days to get caught up, or a ‘cancellation of lease’ will be issued from the park’s attorney and they have 30 days to move out.

If a tenant does not come to my office and fill out a paper stating why they are paying late, then on the 15th I will send a letter stating they have 15 days to pay up or they will be issued a ‘cancellation of lease’.

In other words, I may be willing to work with a person on late rent if they come to me first. I would rather collect late than have an empty lot. If the tenant does not contact me and they are late in paying, then on the 15th they get 15 days to settle up or they are out in 30.

If I’m explaining my plan correctly, this should pretty much rid myself of a whole lot of time chasing tenants to collect rent. Tenants either come to me, or they get a letter. No knocking on doors begging for rent.

What do you think? Any other ideas out there?

Mark


#2

Mark,

One of the things I try to avoid when I have a late payor is giving them a chance to explain WHY the rent or payment is late.

I don’t want to hear about how the dog ate the check, or they lent money to their no-good brother-in-law who lost it at the grandmother’s fifth wedding (to a guy with one leg, but a heart of gold, we’re sure this one will stick), which was held in a casino.

I explain that if they can’t make their bills, the one bill they need to be sure to pay is for their housing. Because I will charge late fees and I will evict. It’s their responsibility to get the money to me- on time. I do not collect rent in person.

Now, there are real good reasons for being late, and someone with a great payment history is always going to get a second or even third chance from me, but it’s best to start off being strict, putting the responsibility on them and then soften down the line where appropriate.

Have the late-payors served a few times and everyone will tighten up.

good luck,

Anne

PS- I should add, I’m not a park owner, just have a lot of tenants and payors, you should listen more closely to others who are park owners if their advice conflicts.


#3

All good advice. I really don’t care if I hear a reason as to why a payment is late. I’m more interested in hearing how they are going to catch-up. Calling me on the phone and telling me how they will catch-up isn’t good enough. They need to come to my office (which will inconvenience them) and write down their intensions of how they will pay-up. They will have to sign the form, and the form will also indicate that they realize they are in violation of their lease and could have it cancelled if it continues. That way if they don’t honor their intensions or claim they told me something else on the phone – I have it in writing. Basically I’m giving those who pay late one chance to get good or be served with a cancelling of lease. But they have to come see me face to face, and that will make many uncomfortable. The days of a park manager making call after call or knocking on doors will be done when we take over.

Mark


#4

I have worked w/tenants having problems, but my modus operandi is to expect rent on the due date or before. If I don’t have the rent or a plan for real quick payment by the next day I serve a Pay or Quit Notice. That does get their attention, & the fifth day is the latest I’ve had MHP rent. If it is a bad situation I get them out for Rules violation (Summary Ejectment in NC) before it gets to the point they are significantly late. I tell prospective tenants I am death on drugs, abuse & late rent, & I follow through even when it is a pain. My tenants come to me w/enough bad habits that I don’t want to ever do anything that would encourage them to be tardy, so I have no grace period.

To reward good behavior I send a $5 Wal-Mart gift certificate when rent is paid 3 or more days early (it happens). I am generous w/extras like chocolates for the adults & toys for the kids @ Christmas, trees & flowering plants, paint, & fixtures (e.g., fireplace, dishwasher), as well as efficient well-done repairs. The main thing I expect in return is prompt rent, & I think I even get a little respect for that–

Tye


#5

I have been in the mobile home rental business longer than I care to remember. My parents built a MHC and I was basically raised in the business. I will tell you that from my experience your tenants will gladly give you their problems if you take them. I have a motto that serves me well " NO PAY NO STAY". If you start letting tenants give you excuses they will come up with a new one every month. Business is business and Christmas is over. As far as chasing your rent sometimes you have to do it. It sends a message to the tenants that it is your money and your not playing around. If I have to go collecting in my community I go pissed off no Mr. Nice Guy. I have had to tell several to their face that I didn’t beg them to rent and I don’t like begging for MY money and I am not going to beg them to stay.

Best Wishes


#6

Mark,

I have a manager so that lets me be the bad guy and she can use me as the hard a** landlord, she lets me know by the sixth of each month who is late and there is usually one or two and guess what it’s the same ones every month usally a different excuse each time. If your community is full that makes a difference if I have several empty lots I tend to go a little longer than when the park is full. But I always use someone else as the go between I never confront the tenants face to face I found that helps me keep my blood preasure normal. When I collected late rent it was always a bad day. We try to contact the tenants once after 5 days either in person but always with a letter of notice of lease violation that always gets them calling your manager right away. Remember the more you give the more they’ll take and you are not really doing them any favors in the long run, Yes the first or second timers you can work with but let them know Thats IT No More. I have friends in PA and MD that offer a discount if their tenants pay early or on the 1st but I’ve seen problems with collecting additional rents in court with the judges here, If you give them the discounted price thats all the judge will allow plus a one time 5% late fee here in MD. Good Lock, Terry