Well there’s a lot to go from there. My first advice and one I plan to follow is investing in a landlord-friendly state. California for example where I live it can take up to 3 months to get a sheriff out to evict somebody and if that resident knows the system actually getting them out can take an additional 3-4 months after that. At that point you’re looking at 6 months of lost rent minimum plus fees and if you own the unit they are in all likelihood trashing the place. Arizona where I have a couple properties right now and hope to invest just takes just a few days to evict somebody. But overall the problem is see most with my clients is they can often be too lax with payments and let people continue to put it off just so they can keep the spot occupied. Of course as we know a few months later it often ends up the person gets evicted or just leaves in the middle of the night owing a bunch of money. I understand things happen but there has to be accountability or the inmates will run the asylum.
But that mostly goes back to screening as more often that not people who don’t pay their rent have a habit of doing this in the past. I always suggest my clients to not only run a credit check but also an in-depth eviction/criminal check. Credit reports will often detail landlord debt and eviction judgments, but they often take 90 days or longer to hit the report. If you do a full criminal/eviction scrape you can find out if a person was evicted last week whereas a simple credit report will not find out that information. We hear a lot about big data these days so I figure may as well take advantage of it. Preventing the money from getting collections is the most effective way to “collect” if you will. I also recommend raising security deposits for high-risk tenants such as those with low incomes or with extremely highly questionable credit to cushion any blow that may come with a eviction or judgment. Raising deposits is such an underutilized tool in my opinion. I would supplement a security deposit every time I could if possible (pet deposits, add’l $ required with low credit scores, add’l $ required if unit is park owned, etc)
But for those who make it through that process and end up with judgments to be collected, it unfortunately is a business where if you collect 20% of debt as a whole you are doing an amazing job. A company such as mine would generally offer a 60/40 split in your favor which is adjusted based on volume. But the reality is that if your debtors already have poor credit or are on government income we as a company due to legal restrictions can basically make the calls and cross our fingers that said debtor actually cares about their financial future. You can’t garnish the wages of someone who doesn’t work so that’s out of the question and if they simply don’t care that their credit is getting dinged then there’s not a whole lot a collections company can do to be honest. My gues is with situation you describe a realistic return via collections would be around 10% of outgoing debt. Not a lot but better than 0%.