This is one of those “shame on us” questions. Nevertheless - here it is. And the question is as it is stated - we have a couple parks that we basically stopped actively managing during covid (locked down in another state sheltering in place - existing management was weak before covid - during covid simply quit) - and we find ourselves two years later with a resident population which largely stopped paying because collections were not enforced. It is not realistic obviously to try to get their back debts - but my larger concern is simply getting folks on board with paying lot rent again and how hard to bring down the hammer. We are hiring new on-site managers, we do have capital to deploy for the inevitable round of evictions. Any other ideas? Should we be doing a total community “reset” at this point? Should we give folks a shot who moved in during the eviction moratorium and our lazy management when we weren’t watching? AKA - unauthorized residents or even squatters? Start everyone again at a zero balance? It’s hard to know what to do and honestly pretty frustrating / intimidating - almost afraid to try to collect rent from our own tenants at this point. Yes - we were stupid. Had internal family drama, plus covid - plus just paying more attention to other assets than these parks. Now it’s time to get them under control. Some additional working capital would be nice - we do not have any debt - but I assume nobody will lend on parks that are collecting 10% or less of the rent roll currently. We can make it work without outside capital. Ideas on jump starting collections and community relations welcome. Thank you!
Additional information: the areas of the parks are very good, skyrocketing single family home prices and apartment rents - demand is not an issue.
Can not advise you what to do based on your managemant style but I know what I would do if it were me.
CLEAN HOUSE. People need to learn consequences or they develope a sence of entitlement.
Your residents have had a free ride and the ride is over. Time to pay. I would have zero compassion for those that did not pay and would assume they should have plenty of savings at this time. I know they likley pissed away every cent but I could not care less.
I would inform all resident that the no pay no stay is in effect immedially and that non payment notices will be sent followed by eviction notices in the event rent is not paid on time.
In addition I would determine what every tenant owed in back rent and set up a repayment plan for each individual tenant.
I am running a business, have no compassion since they all had a reasonably free ride, all should now be re-employed or should have been recieving welfare all along and it’s now time to pay up, leave or be evicted.
No good deed ever goes unpunished.
That is my management style, probably not supported by many landlords, but for me money has no emotions.
I would humbly suggest -depends on how much financial loss and time you are willing to sustain. What state are you in if I missed it?
Option 1. Start the eviction process with a simple lawyer letter to tenants (x days to pay, or leave/start payment plan) - usually this shows you are serious and will get some to pay, others to leave and you will then learn which ones know how to work the system and can be the most troublesome. Next start the process- a sheriff posting a door notice is better than a random server if able, and start with most social/vocal/troublemaker tenant so the other will know what has occurred.
Option 2. Depending on how much your time is worth and or experience level from the hands on management side, go to the parks yourself bring a potential manager to show them exactly how you eant it done to speed up the traing process and start getting things in order.
Option 3. Hire a temp enforcer (bulldog), someone who is not afraid on confronting tenants and have them consistently call/knock on doors and be a constant presence in the park.
Keep in mind when planning your actions that it was a eviction moratorium not a rent vacation. Every tenant knew, or should have known, they would be required to repay the back rent. They should all be lining up to heap praise on you for all you did to provide them housing during the pandemic.
You do not want to keep any tenant that would disrespect you by refusing to pay every dime they owe.
Appreciate your helpful responses and I’m on board - yes even with Greg “no emotion” Hammer lol. Greg - one wrinkle - we have this month significantly raised the lot rents - (they were under before) 40%-100% and issued new leases to tenants who were on the rent roll before the pandemic (have not made up our mind about ones who came in without an application during the pandemic). Would you - on top of this aggressive increase - also try to get the back rent? Or would you let it go? I was thinking of just letting people sign up for the federal help and take whatever Uncle Sam sends us for their back rent and call it a wash.
So far we are not getting a ton of complaining about the heavy and sudden increase-to-market - people have said they understand they got a free ride - and we have so far already five signed residents paying the increased rates - two of them were not paying at all before we issued leases. Another 25% or so of folks who hadn’t paid in two years began paying this month - but their old rates (they ignored so far the new leases).
The new rates themselves will of course raise the NOI significantly and thus the value of the parks - and I wonder if getting high collections on high new lot rents may be worth more than collecting old rent.
Old rent at one park: $350 → $500 new lot rent - nobody is complaining about it (almost nobody)
Old rent at the other park: $350 → $695 new lot rent (higher priced metro) - more grumbling and a few move-outs. one person has signed, others have not yet. At that lot rent I can fill lots quickly in this metro but it is a high jump for those there already.
Thoughts?
Sounds like it’s time to sell…
Would it be crazy of me to make you an offer?
Being a landlord is not for everyone.
Appreciate it but no thanks
You were forced to loan your tenants their monthly rent and now deserve to be re embursed what they borrowed.
I see no reason to consider not collecting simply because the government forced you into this situation. The fact is many residents could have continued to pay all or part of their rent and many chose not to. You did them a huge favour and will do them another by offering affordable payment plans.
A repayment plan along with the higher rents will result in some leaving but that is a hidden plus allowing you to attract higher quality tenants.
Yeah Greg there is no moral issue here - I’m just speculating what percentage will fail out if I try to get the current rent plus a payment plan. I like your style - you’re giving me some backbone today (and the rest of you too lol) - love it. Gonna go do what must be done lol.
You’re definitely over complicating things IMO. Print out a ledger for every tenant showing what they owe. Write up a quick letter saying you’re willing to work on a payment plan for back rent. Post it to their door with a demand for rent (or whatever the first step of eviction is in your state). No payment or discussion of setting up repayment plan? Continue down the eviction path. The payment plan offer is your lenience.
Thanks westewart - I do have a talent for overthinking.
I would also suggest looking at your lease. We charge a late fee, but also charge a monthly internet per month for outstanding cl balances.
I would just post the eviction notices.
Put everyone on notice. The good ones will find you and figure out how to get caught up.
Sounds like pretty much everyone has dogged you out on the rents since Covid.
Did you get any of the CARES act money? We were out about $100K from 2020 to 2022, I think we received about $80K from CARES act funds. That really helped cut down on the folks that need to be evicted.
One consideration is if you are in a hard freeze zone it is getting close to be a bad time to start doing evictions. You don’t want them to move out and having the pipes freeze, ruining the homes. in the past, I have let non payers skate till the warmer weather hits in the upper Mid West for that reason.
Although I would like to teach my deadbeats a lesson, I am not willing to spend thousand of my money on their education if it can be avoided. The problem with kicking them out because of all the back rent due can cost many thousands when you consider the legal fees, the time it takes to go through the mechanic’s lean process, the renovation cost, and in some cases the cost of demoing the trashy homes and the pain in the ass of selling the home. It has been my experience that no matter what you do, you will never get that back rent. The best you can do is get as many back on track as possible, at least till the warm months if that is an issue.
I wrote a very snarky letter to get some of my deadbeat back on track that worked. I know the tone is not professional but I wanted to smack them across the face with the situation. I have had a very good response with it. I post it below:
Dear ______________________,
You knew this day was coming.
Here it is.
As you known, your track record of paying your rent has been abysmal. During COVID we were denied the use of the courts to replace our freeloading tenants with people who take seriously paying their bills on time and in full. But now the eviction courts are open. And it is now obvious that the State of Nebraska is never going to come through and pay us for the rent you failed to pay yourself.
We have contracted with a law firm to start taking cases to clear out the deadbeats.
But before we pull the trigger we will offer you this:
-
Pay next months rent ($537) on time and in full and we will not proceed against you.
-
Continue to do this every month and you will have a roof over your head. Go back to your old ways and we will turn your file over to our attorneys. And you better get busy collecting boxes.
The rule going forward can be summed up in this beautiful poem:
NO PAY
NO STAY
NO EXCEPTIONS
Park Management
@AndrewD
Wow… You are the man…
This is brutal…
I am glad you are getting a good response.
Here’s another good one.
Date: ______________
Final Attempt to Reach Agreement for Back Rent Owed
Signed payment plan and money order due by: ________________
Balance now due including previous late fees or court costs: ________
Address/Lot#: __________________________________
Dear Resident:
You have an outstanding past due balance. We now need to resolve how you plan to pay your past due balance. If we do not have a written payment plan that the community management company agrees to, we will then obtain both a judgment and a writ of possession. The sheriff will then come out to verify that you have removed your belongings or supervise their removal and padlock the home.
Please propose the highest amount possible that you can pay at the first of each month in addition to your current monthly payment. If we approve this payment plan we will obtain a court judgment but delay padlocking unless you miss a payment. This proposal must be submitted with a money order for this month’s rent plus the proposed monthly additional payment in order to be considered.
My proposed monthly amount I will pay in addition to my monthly rent payment towards my past due balance is $_________.
Total money order received (current rent plus extra payment): $_____________
Resident signature ______________________________ Date: _____________
Printed resident name: ______________________________________________
___ Approved ___ Denied
_______________________________ Date: __________________
Management Company
REMINDER NOTICE OF PENDING COURT FILING FOR NON-PAYMENT OF RENT!
COPY TO RESIDENT FILE
PLEASE SUBMIT YOUR PAYMENT AGREEMENT IMMEDIATELY!
TOTAL now due including current rent, late fees or other charges: $ ___________
LOT #: _________ DATE:
Dear Resident:
Please understand that our goal is to collect the rent so that you can remain a resident in good standing.
PLEASE PAY YOUR RENT AND OTHER CHARGES IN FULL IMMEDIATELY. IF YOUR RENT REMAINS UNPAID, COURT CHARGES WILL BE ADDED TO YOUR BALANCE AS OF THE COURT FILING DATE. ALL CHARGES MUST BE PAID IN FULL BEFORE WE CAN ACCEPT YOUR RENT! WE DO NOT ACCEPT PARTIAL PAYMENTS.
When a resident’s rent remains unpaid, we are obligated to file with the Court. The Court will typically schedule a hearing date within a week. You will be served notice by the “Sheriff” a few days later.
The state statute allows for padlocking of the home by the Sheriff’s Department once the court proceedings are complete.
Paying your rent IMMEDIATELY is the only way to avoid the eviction and the extra court filing and related costs. Please understand that our goal is to collect the rent so that you can remain a resident in good standing.
COMMUNITY MANAGER
P.S. Payment in full must be submitted! Partial payments will NOT be accepted.
WHEN MONEY IS AN ISSUE, we suggest that you consider some of the following sources for a loan: your employer, church, social services, relatives, friends, neighbors, etc.
I have learned leniency for rent collection or rules violations is not appreciated and the tenants only go further behind and break more rules. I had a bad manager who left and I was slow to pick up. Then the pandemic and I still cleaning up. I am insisting on 1.5 months rent. Only 3 out of 7 so far chose paying. 2 are evicted and 3 still haven’t gone before the judge yet. Good riddance to the 2 evicted. They were very problematic. Any vacant homes I will winterize.