Collect the Rent - By Russ Sandlin
An optimist builds castles in the sky,
If I were to tell you a group of managers in Tampa,, Florida, managing a total of 1,728 apartments had a cumulative income collection of 99.9% in their first quarter (this figure is not just rent collected, it includes any lost revenue, skips and evictions) you would call me a liar. I wouldn't blame you.
However, after reviewing the actual numbers from these five communities. I assure you the story's true. How can this be? In the twenty- two years I've been involved in multifamily operations and management. I've never seen anything like this group of people. What strikes me most is that their residents are as proud of their rent payment record as the managers are of their rent collection record. There are no strong arm tactics being used, there are no verbal or physical threats being made and judo is not called in when the resident has a payment problem. Intrigued? Me too!
During a recent seminar, I had the opportunity to ask these Outrageously Successful mana- gers and the equally "hot" district manager for the secret to their success. Here's what they said. The secret to developing and implementing a 99.9% successful income collection procedure at your community is dedication. These managers were dedicated to collecting the rent.
Sometimes when you talk about rent collection with managers, they get this funny look on their face and they seem to want to go wash their hands. It's as though the process of rent collection is a dirty, nasty, ugly job but someone had to do it. These five managers beg to differ.
Let me share a thought from the district managers's rent collection philosophy: Rule number one: Maintain a positive mindset. I recall a manager expressing to me that she was not successful in collecting the rent because she was too nice of a person.
Too nice? We are all nice. We don't hire people who are not nice! I'll admit that I would be suspect of anyone who told me they actually enjoyed knocking on residents' doors and asking for money, but we are professional people. Do not burden yourself by taking these matters personally.
He said, "It has been my experience that most managers approach the rent collection process with the mindset that the resident must pay the rent or vacate the premises. When the resident offers an excuse for not paying the rent, the typical manager resorts to "Plan B" and starts working on getting the resident out.
This group of managers approaches the process from a totally different perspective. First of all, they start very early, before the rent is past due. Secondly when the resident offers an excuse for not paying the rent, they focus on solutions. They help the resident develop a specific game plan to get the money. It's not pay the rent or leave, that's too easy. It is simply: Pay the rent! This makes a lot of sense.
If you have a hard time grasping this concept, let me give you a specific example from one of the managers. Recently a resident in the process of changing positions, allowed his rent to become delinquent. (Please note that this community has a white collar, upper- middle class resident profile and this resident fit the profile perfectly.)
The manager immediately started contacting the resident to determine why the rent was past due and when it would be paid. After some discussion, the resident assured the manager the rent would be paid in full by the 22nd of the month. The manager responded by telling the resident this was unacceptable behavior and that he needed to get the rent paid immediately. The manager took time to remind the resident he had made a commit- ment to the manager when he signed the lease to pay the rent on the first of each month.
The resident actually got his new boss on the phone with the manager and the resident's boss guaranteed the manager that the resident was, in fact, getting the new job and would be in a position to pay the rent on the 22nd of the month. But not our superstar rent collector.
She told the boss, since he was willing to guarantee that the resident would be able to pay the rent, the boss should loan the resident the money and the rent should be paid immediately. The rent was paid! There are a million stories just like this one in Collection City. The difference is the manager's attitude. So many times our managers adopt the attitude of the bad guy. They feel uncomfort- able asking the resident to pay the rent when it's late.
The Outrageously Successful managers, on the other hand, understand that they are the good guys. The resident has made a commitment to you to pay their rent on time.
You provide the resident with a home, shelter, gas, water, trash collection, not to mention all the extra services. At no time can the manager make excuses to the residents for nonperformance.
We are out there every day doing our job in a professional manner. We should expect the resident to pay their rent ON TIME! When they don't, we need to be understanding (empathetic, not sympathetic) to the point of helping them find a way to pay their rent.
Working with them, not to delay payments over a longer period of time, but to create solutions to get the rent paid when it is due. I encountered this very attitude during this seminar and it obviously pushed my buttons. These people are great. The following are several other innovative collections techni- ques which came out of the seminar: Get the leasing consultants to consistently get an emergency telephone number on every application.
As a manager, never approve an application without someone to contact in case of emergency. If the rent is late and you are having a difficult time contacting the resident, use the emergency phone number. This is an emergency! Get the resident to use their Visa or MasterCard to get a cash advance to pay the rent when it is due! If you have a clause in your lease that states the rent is due on the first, but a late charge is not assessed until a later day (i.e. the fifth or the sixth) remind your resident this does not mean their rent is due on the later date.
When the resident comes in on the third or fourth with a check, say, "We really appre- ciate the fact that you have paid your rent, however it is late. Your rent is due on the first of every month." Advise your resident that if they habitually pay their rent late (that means after the first of the month) it will be reflected on their credit rating as a late payment. This is especially important if you have a late payment clause in your lease agreement.
The most effective form of rent collections is direct contact by the manager. Simply hanging a late notice on the resident's door will not get you 99.9% collected. Call every resident when their rent is late on the morning of the second day of every month.
Carry a list of late residents around with you. When you see them on the property talk to them about paying their rent. Don't harass them, be solution-oriented.
Counsel your resident and help them find creative ways to pay their rent. If a resident is not going to pay, get them out NOW! Don't wait ! Take no prisoners.
When a resident moves into your community, have them circle and initial the clause in their lease where it says the rent is due on the first of each month. It's interesting. As I read back over these tips, I have a gnawing feeling that these techniques will be interpreted as heavy handed.
If you feel this way, remember: If I were to tell you a group of managers in Tampa, Florida, managing a total of 1,728 apartments had a cumulative income collection of 99.9% in their first quarter (this figure is not just rent collected, it includes any lost revenue, skips and evictions) you would call me a liar. Success comes in cans and not in cannots. I tip my hat to these superstar managers! Well done!
Reprinted with permission. Russ Sandlin is president of The Russ Sandlin Group, a nationally-recognized organization specializing in income focused training and marketing for residential & commercial property. www.russsandlin.com - email firstname.lastname@example.org
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