Bill Gray – The Landlord Doctor

Insider Advice on Collecting Tenant Debt and Screening Tenants

Posts Tagged ‘delinquant’

Accurate Tenant Screening may Become Much Easier!

Posted by Bill Gray on July 20, 2010

A credit report is basically a report card of how a particular person pays their bills. Why are monthly rent payments not reflected as a trade line on the credit report? I as well as many [tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5Dothers, have felt for years that rent payments should be included on the credit report, just as mortgage payments are. If a tenant pays the rent on time every month, they should be awarded credit for paying their obligations. On the other hand, a tenant who does not pay their rent, or pays late, should be dinged on their credit, as they are if they pay a credit card late or skip the payment.

This month Experian announced that it has acquired RentBureau of Atlanta, Georgia.  This acquisition may finally make it possible for rent payments to be accurately reflected on the credit report. RentBureau is the nation’s largest consumer-reporting agency specific to the multi-family industry. RentBureau provides landlords and property managers a way to report rent payment history.  Click here for the press release

I have not learned the details of what Experian’s plans are with this acquisition, but I assume the result will be that landlords will finally have the ability to report rent payments directly to Experian, just as a mortgage company reports payments.

This could be a huge leap forward for both landlords and tenants. By reviewing a prospect’s trade line reflecting rent payments, a landlord will immediately know if the prospect has paid his/her rent on time. Conversely, tenants will finally receive credit for timely rent payments.  Using this information to screen tenants could greatly decrease the possibility of a tenant skipping or being evicted because the rent was not paid.

I am curious how my reader feel about this new development in screening tenants. Please take two minutes and complete the quick survey. Include your email address and I will send you my free E-Book “How to Detect Social Security Number Fraud.”

Click here to complete the short survey

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlorddoctor.com

Tenant Debt & Screening Forum www.theinformedlandlord.com

Copyright 2010 – Click here to reprint/re-post

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Posted in Credit Bureau Reporting, Credit Report, Evicted, Landlord, Property Management, Tenant Screening | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , | Leave a Comment »

Incomplete Rental Applications Cost Landlords Profit

Posted by Bill Gray on January 19, 2010

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DFinancially, many landlords are shooting themselves in the foot. The application process is normally the first place they do so. Incomplete and inaccurate rental applications cost landlords much needed profit. Nearly 50% of the applications I review are either missing information or are illegible.

Sloppy applications speak negatively about the prospects filling them out, but they say even more about the landlord or property manager who accepts them.  When a landlord accepts an incomplete or illegible application, he or she is telling the applicant, “I don’t care.” Think about what seeds an “I don’t care” attitude plants in the applicant’s head.

If the landlord is not serious about the application and the information which may or may not be in it, what else is he lax with? If he is not serious about the application process, is he serious about the rent being due on the 1st of the month? If the landlord is unprofessional during the application process, is he serious about the prospective tenant taking good care of his rental unit?

The application has several important purposes, all of which rely on it being completed legibly.

Much of the information requested in an application is needed to sufficiently screen the tenant. When I see a sloppy application, my first thought is that the landlord is cutting corners in the screening of potential tenants. By the way, the reason I am called upon to look at the application and file is because the landlord is owed money by the very applicant who submitted a sloppy application. Now, he is turning to me for advice on collecting it. I firmly believe there is a direct correlation between the application/screening process and tenants who leave the property owing an average of $3,500.

The rental application should contain a space for at least one emergency contact.  Completing this section should always be a requirement.  Nobody wants to envision a situation where you need to contact someone in case of an emergency, but if you do, you will have the contact information to do so.

The property manager who is eager to rent seldom considers the last purpose of the rental application. The information on the application is invaluable in the collection process when the tenant is either evicted or abandons the property and the lease. In that case, an incomplete or illegible application makes collecting the debt difficult, if not impossible.

Require that your applicants complete the application in its entirety and legibly.  Doing so will decrease debt and increase profit.

Also see my article, “Don’t Miss an Important Component to Screening New Tenants!

Email me your tenant screening or tenant debt questions.

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlorddoctor.com

Copyright 2010 Click here to reprint/re-post

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USA Today – The Landlord Doctor

Posted by Bill Gray on January 4, 2010

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DDecember 30th USA Today published an article titled “Apartment renters win as vacancy rate climbs”, when he wrote the article author Paul Davidson asked me what effect concessions are having on the tenant delinquency rate.  My quote is included in his article.  The bottom line is that concessions may help rent empty units, but tenant debt continues to rise.

Link to Article: “Apartment renters win as vacancy rate climbs”

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlorddoctor.com

Tenant Debt & Screening Forum www.theinformedlandlord.com

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Posted in Evicted, Landlord, Landlord Tenant, Property Management, Tenant Debt Collections, Tenant Screening | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment »

Tough Economy Makes Tenant Debt Tough, but Not Impossible, to Collect

Posted by Bill Gray on December 28, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DThe downturn in the economy has caused many landlords to lower their credit requirements for new tenants.  Of course, lowering credit requirements increases financial risk. Renting to a tenant with little or poor credit increases the likelihood that the tenant will at some point leave owing the landlord money.

This change in rental criteria is understandable, considering the need to keep all units rented.  But know that when you lower your standards and in turn incur debt, this debt will be tougher to collect than if you had rented to a tenant with good or great credit.  If you use a collection agency to collect the debt, you should also lower your expectations about how much you feel they should collect.

Collection agencies are reporting that they are receiving many more files than two years ago.  The average amount of debt in these files has also increased.  Relaxed rental standards, coupled with the high unemployment rate, have put collection agencies in a tough spot.

The American Collectors Association reports that the collection industry debt recovery rate is down 30-40% over last year.  Angi Pusateri, National Sales Manager for RentDebt Automated Collections, confirmed that her company is experiencing a similar decline in debt recovery.  However, RentDebt Automated is weathering the storm well and has added employees in the last year at their offices, which are located in Nashville, Tennessee and Dallas, Texas.

Jeff Cronrod, the President of Rent Recovery Service, a national collection agency specializing in the collection of tenant debt, estimates that nearly 40% of the debtors his company is trying to collect from are unemployed.  “It is not that these debtors do not care about the debt or their credit. They simply have no means to pay the bill,” Cronrod explained.

Saul Wertzer, President of Rent Recover Solutions in Atlanta, Georgia (not to be confused with Cronrod’s Rent Recovery Service), told me that his company has also seen an increase, not only in the number of collection files, but also an increase in the average amount of each file.  I have heard this from every company I have spoken with, in every corner of the country.  Wertzer went on to say that it is important for landlords and property managers to think long-term about debt they are owed by previous tenants.  Over time a good percentage of tenant debt is collectible.

If your collection agency has served you well in the past, stick with them, even though recent recoveries may have dropped.  Trust me, every agency is experiencing a tough time collecting debt.  Don’t jump ship and hire another agency, because eventually the economy will improve and many of these tenants who owe previous landlords will get back on their feet.  When they do, they will work to clean up their credit and pay their debt. But don’t wait until then to do something about it.  Now is the time to make sure the debt you are owed is reported to all three major credit bureaus. Whether your collection agency reports the debt or you report it via an automated service, make sure every dollar you are owed is reported.

Doing so will greatly increase the odds that you will get paid the debt your previous tenant owes you.

Email me your tenant screening and tenant debt questions.

Bill Gray

www.thelandlorddoctor.com

www.theinformedlandlord.com

Copyright 2009 Click here to reprint/re-post

Tenant Debt & Screening Forum www.theinformedlandlord.com

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Posted in Collection Agencies, Credit Bureau Reporting, Landlord, Landlord Tenant, Landlord Tenant Law, Property Management, Tenant Debt Collections | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment »

End of Year Housekeeping – Old Tenant Debt

Posted by Bill Gray on December 18, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DWhile the end of the year is a very busy time of the year for most of us on a personal level, it is usually a slow period for landlords.  Many of us spend this time working on our taxes, cleaning out our desk drawers and preparing for the New Year.

One often overlooked piece of housekeeping that impacts your profit is old tenant files which still have balances due.  All too often, landlords simply file them away and forget them.  By storing these files without taking any action, you are literally throwing money away. You may think it’s impossible—that you’ll never see a dime of the monies owed, but some percentage of the debt you are owed is collectible.  It may not be collectible today, but over the next seven years, some of that money most likely will be paid.

Take the time to do some end-of-the-year housekeeping.  Start by separating old tenant files which have no balance due from the ones that owe.  One by one, go through the files with balances to make sure each contains a signed lease; then, make a breakdown of what is owed.

There are three different options to select from when collecting your lost profit.   Each has its pros and cons.

  1. Got to court and sue the previous tenant for the balance owed.  This option can be expensive and time consuming, but with the proper outcome, it can be an effective way to collect tenant debt.
  2. Hire a collection agency that specializes in collecting tenant debt.  If you do not have an agency, spend an hour online and find one.  If you don’t know what to look for in an agency, read my blog article on how to hire a collection agency to collect tenant debt. How do I Hire a Collection Agency to Collect my Tenant Debt?”
  3. Report the debt to the three major credit bureaus, Experian, Equifax and TransUnion, as a collection account.  The ding on your previous tenant’s credit report should remain there for seven years after they move out.  There are several online resources for reporting tenant debt to the credit bureaus.  It’s worth your time and effort to research them.

Too often, I hear landlords advising other landlords to forget any debt they are owed and move on because it is not collectible.  From experience, I can tell you this is not true.  While all of it may not be collectible, a percentage of it is, maybe not immediately, but over time, you can recoup some of your profit.

There’s only one way to ensure that you won’t collect any of the debt, and that’s to do nothing, storing the files away and resigning yourself to accept the loss.   Trust me when I tell you that doing nothing will cost you profit.

Email me with your tenant screening and tenant debt questions.

Bill. Gray

The Landlord Doctor

www.thelandlorddoctor.com

www.theinformed.com

Bill@thelandlorddoctor.com

Copyright 2009

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Landlords Who do Not Screen are Shooting Themselves in the Foot

Posted by Bill Gray on September 23, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DemailOf the 20 to 30 emails I receive per day from landlords with tenants who owe them money, 5 or 6 are from landlords who did not screen their tenants before they rented to them and are now upset that the tenant burned them.  I shake my head when I read these requests for help.

For whatever reason, the landlord rented to someone who “looked okay” and then got upset when the tenant burned them.  Would these landlords buy a used car sight unseen?  Or show up at a dog shelter and say, “give me any dog, I don’t need to see it or know anything about it.”?  Of course they wouldn’t.  As absurd as this sounds, it is basically how they run their rental business.

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Tenant Surety Bonds: Do They Affect How Previous Tenants Pay After They Move Out?

Posted by Bill Gray on August 31, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DAs with all of my articles, this one is from the perspective of a landlord collecting tenant debt.  Remember, I am on the back end of the deal,quesion5 looking at damaged rental units and unpaid rent.  I will limit my comments about tenant surety bonds to my experience and how they affect debt collection after a tenant moves out.

What is a surety bond?

A bond is not a deposit.  A surety bond is a product that a prospective tenant can purchase in lieu of a traditional security deposit.  The bond is normally nonrefundable and costs significantly less than a security deposit, thus reducing the tenant’s Read the rest of this entry »

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An Organized Landlord Has Less Tenant Debt and More Profit

Posted by Bill Gray on August 22, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DMessyFilesAn organized landlord is a more profitable landlord.  I have reviewed many thousands of tenant debtor files, and one thing is certain; by looking at a tenant file after the tenant moves out, I can usually tell you fairly accurately how the property is being managed.  A well-organized landlord who documents everything has less tenant debt, and, as result enjoys more profit.

Organize your files logically and consistently.  At least half of the files I review are little more than a pile of unorganized papers thrown into a file folder; and often very important documents are missing

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When a Tenant is Behind in Rent, When Should You Call it Quits?

Posted by Bill Gray on August 17, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DToday I reviewed over eighty tenant debt accounts and noted that the average balance due is significantly higher than a year ago. With theemptypockets exception of the most expensive areas (such as California, New York City, and the northeast), the average amount of tenant debt is normally between $2500 and $3000.

I separated all accounts over $4000 and took a hard look at them to determine why there were so many high balances.  The answer was that landlords allowed tenants to go month after month paying little or no rent, before they were eventually evicted or the tenant skipped out. This is obviously a sign of the times.

I assume landlords are allowing tenants to live in their units for three to four months without paying rent for one of two reasons:

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Posted in Collection Agencies, Credit Bureau Reporting, Evicted, Landlord Tenant, Tenant Debt Collections | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments »