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?