Bill Gray – The Landlord Doctor

Insider Advice on Collecting Tenant Debt and Screening Tenants

Posts Tagged ‘lease’

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

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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 »

Don’t Miss an Important Component to Screening New Tenants!

Posted by Bill Gray on October 7, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DA vital part of tenant screening requires more than learning about applicants, their employment and credit history—it’s learning everything you can about theirtele-interview2 previous rental history. Yes, former landlords who have rented to this tenant before have a wealth of information which should be weighed carefully before you approve an application.

Think about it. For six months or six years, former landlords have received or not received payments from your applicant. They know how the tenant left the property and about any complaints made when they leased it.  Their file and recollection can provide you with more insight than you’ll find by calling employers or ordering a credit report.

Start with the end in mind and weed out any applicants who might not treat your property with a gentle, kind, and caring hand. Was their former landlord impressed with the condition and cleanliness of the property when the tenant moved out?  Or were they overwhelmed and disappointed with the lack of attention and personal consideration they showed by leaving the unit a mess?

Screening former landlords can reveal much more, though, and the information you gain is worthy of your time. Does the tenant have a history of short-term housing, indicating problems with payment or other terms of the lease? Was the tenant a nuisance to other tenants? Did the tenant honestly disclose past information to previous landlords, and did that information hold true?

I should note here that all applicants are not Honest Abe.  Dishonest applicants know that telling the truth on applications could hurt their chances of being

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Posted in Credit Bureau Reporting, Landlord Tenant, Tenant Screening | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , | 7 Comments »

Wait Before You Hand Over Keys to New Tenant

Posted by Bill Gray on September 16, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DkeysOften after a tenant signs the lease, the landlord immediately hands over the keys.  At this point, many landlords miss a critical opportunity to gain profit and minimize the risk that the tenant will eventually leave owing money.

In 30-40% of the tenant debt files I review, either the move-in inspection was done poorly, or not done at all.  This makes it difficult to accurately document any damages the tenant may cause while he or she lives in your rental.  In turn, this makes recovering the repair Read the rest of this entry »

Posted in Landlord Tenant, Landlord Tenant Law | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 6 Comments »

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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Posted in Evicted, Landlord Tenant, Tenant Debt Collections | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments »