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 Identity fraud is now the fastest growing crime in the United States, and too often landlords are the victims. You may not know you’ve been scammed with a fake SSN until you try to collect your delinquent rent, only to find out you don’t know your tenant’s true identity. AAOA provides SSN Fraud Reports that can help you detect a con before you rent.
Verify prospective tenant identity. Detect false or tampered IDs. This search scans 19 billion public and proprietary records to instantly verify basic data and potentially fraudulent identities. These resources automatically validate identity against known matches such as: The zip code matches the state. American Apartment Owners Association offers discounts on products and services for landlords related to your rental housing investment, including rental forms, tenant debt collection, tenant background checks, insurance and financing.
Find out more at www.joinaaoa.org. by Bill Gray
Financially, 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. Copyright 2010 Bill Gray
Bill Gray is a tenant debt collection specialist, which makes him a tenant screening specialist. For tenant debt concerns, email him at Bill@thelandlorddoctor.com. Visit Bill Gray’s blog at TheLandlordDoctor.com.
See our seven part series, Vital Tips to Increase Your Debt Collection.
See Bill Gray’s feature, Tenant Screening Tips: Beyond the Basics.
American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa. by Bill Gray Our country’s current economy has had a severe impact on the real estate and housing market. The nightly news covers the blight of communities impacted by a high number of foreclosures and the emotional stories of people who are facing such a crisis. Unemployment, lack of medical insurance, and the credit crunch caused by sub-prime mortgages add to the crisis, making the current real estate market grim. As a result, the downturn of the economy has also significantly affected landlords and property managers, presenting them with an unprecedented number of challenges.
As ‘The Landlord Doctor,’ I’ve reviewed over 70,000 cases of tenant debt, encompassing more than $200 million dollars. Every day, I witness the negative impact of our economy on landlords and property managers across the country who seek my advice and instruction in reducing or collecting tenant debt. As I sit on boards of professional associations and talk to the people who attend my conferences, I’m astounded by the increased spark of questions and concerns raised by landlords because of the economy. As more people are displaced from their homes, those questions and concerns will continue to rise. The need for extensive tenant screening will increase as people become victims of the economy, and the need to collect tenant debt will be a pressing issue for landlords. There has already been a tremendous increase in landlords seeking my assistance in these areas, which is why I thought I’d share two common questions which have been posed in the past few months. “My tenant is three months behind on rent. He’s always been a good tenant, but has lost his job. What should I do?” First, like you, I sympathize with your tenant’s situation. However, three months is a long time to receive free housing. Remember, while you’re trying to be a nice guy, being a landlord is still a business.
My experience shows that once a tenant is allowed to become two months in arrears on their rent, the odds are slim that they will become and stay current. In fact, these tenants usually owe much more than two months rent when they leave. When you first become aware of a change in their financial situation, make it clear that while you empathize with their dilemma, you cannot afford to allow the rent to go unpaid. Be straightforward from the onset, notifying the tenant that carrying a balance due on rent is not an option.
Additionally, a good attorney will advise that past case law has indicated that routinely allowing tenants to pay late sets a precedence which could force you to continue accepting late rent payments. Even worse, allowing one tenant to pay late, while refusing other tenants the same latitude, may cause a Fair Housing lawsuit, as all tenants must be treated equally.
“My tenant skipped out on their lease and damaged my rental. How can I collect what they owe?’” This situation can be more complex. While it’s certainly something no landlord wants to encounter, it happens. Though this situation is more common during tough times, efficient property managers have learned to minimize it by applying good business practices from the time the prospect walks through the door, until he or she moves out of your rental. If it happens, I recommend that you take pictures and document all damages.
Follow your state law regarding proper notification to the tenant about the application of their deposit. Insofar as collecting the debt, you have three options: 1) sue the debtor in small claims court; 2) hire a collection agency (only an agency that specializes in tenant debt), or report the debt to all three credit bureaus and attempt to collect it yourself.
While I know that each of those situations has its own unique set of circumstances, a common theme prevails—an increasing number of landlords and property managers are experiencing a rise in cases of tenant debt. These new challenges should make us more aware of the need for prevention, education and remedies in screening and the collection of tenant debt. Use this difficult time to hone your skills as a property manager and your focus on the details. Improve your business practices by making small changes and improvements. As a result, you’ll decrease incidences of tenant debt and increase your profits. These are critical areas landlords must address to survive in any economy. Copyright 2010 Bill Gray
Bill Gray is a tenant debt collection specialist, which makes him a tenant screening specialist. For tenant debt concerns, email him at Bill@thelandlorddoctor.com. Visit Bill Gray’s blog at TheLandlordDoctor.com.
See our seven part series, Vital Tips to Increase Your Debt Collection.
See Bill Gray’s feature, An Alternative to Security Deposits. American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.
To subscribe to our blog, click here. Some Landlords Choosing Surety Bonds Over Security Deposits: But Will It Work for You?
by Bill Gray
As 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,  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 move-in costs. I have heard it presented as a type of insurance policy to a prospective tenant. I understand that most, if not all, of these products are underwritten by insurance companies. My research indicates that there are a couple variations to this type of service depending on the company. Does a surety bond relieve the tenant of any financial responsibility to the landlord? No, it doesn’t. A surety bond is usually an insurance-type product, but it holds the tenant responsible for any debt that is owed the landlord. Depending on how the service is structured, the tenant who leaves owing a balance will be pursued by either the landlord or the surety company for the amount owed. Do tenants who purchase a bond and later leave the property owing a balance generally pay what they owe? My experience is that collecting from a previous tenant who bought a surety bond is more difficult than collecting from a tenant with a traditional  deposit. Collecting tenant debt is a tough sell to the debtor with a traditional deposit, and a surety bond often makes the difficult debt collection process even more difficult.
Collectors who do not understand the surety bond and how it works are at a big disadvantage when trying to overcome objections from the debtor.
Why are tenants who purchase a surety bond less likely to pay than those who pay a deposit? There a couple possible reasons for why these previous tenants are more likely to refuse to pay their balance. In addition to the usual objections, they often feel they do not owe anything because “they had an insurance policy.” Even though the bond sales literature and contract state that the tenant is liable for any charges when they move out of the rental unit, the tenant often “understood” something different when they purchased the bond. Imagine being a fly on the wall in a leasing office. Here comes Mr. Prospect looking for a home to rent. Funds may be tight and he is looking for the best deal he can find. He is greeted by the smiling landlord or leasing agent anxious to rent an empty unit. He is presented various floor plans, locations, and lease options. “How much is the deposit?” he asks. “Well, Mr. Prospect, you have two options: you may pay a traditional deposit of $1000 or you may purchase a nonrefundable bond for $100.” What did the prospect hear? Often, he heard $1000 (thinking, “Wow, that’s lot of money!”) or he heard blah, blah, blah $100 (thinking, ”That’s not much.”). He is also probably thinking that moving is expensive and that this is a way he can save money on the move. Even if the details of the bond were fully disclosed at the time the bond was purchased, often the new tenant could not explain those details. If the word “insurance” was used at the time the bond was sold, this only strengthens the tenant’s objections to paying anything he owes the landlord when he moves out. His experience with insurance is his car insurance. He pays his car insurance premium so that if he has an accident, he won’t have to pay the damages; the insurance company pays. In the average tenant’s mind, the deposit bond he purchased to rent his apartment is no different. He bought the bond, and although he may have damaged the apartment, he feels he is covered because he bought the “insurance.” I have no way of knowing for sure, but another good question to ask related to this process is: How well does a tenant who believes they have an “insurance policy” on damage to their rental care for the unit itself? It is plausible that a less than desirable tenant may see the purchase of what he feels is insurance as an excuse not to take care of his rental unit. Surety bonds are relatively new to the residential housing industry. If the use of this service fits your business model, I encourage you to use it. However, from a collection standpoint, I strongly urge you to explain in detail to your new tenant what the bond is, how it works, and what his financial responsibility will be. An extra five minutes explaining this may save you thousands of dollars after the tenant moves out. Copyright 2009 Bill Gray
Bill Gray is a tenant debt collection specialist. For tenant debt concerns, email him at Bill@thelandlorddoctor.com. Visit Bill Gray’s blog at TheLandlordDoctor.com.
See our seven part series, Vital Tips to Increase Your Debt Collection. American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa. To subscribe to our blog, click here. by Bill Gray
 Some of my most uncomfortable moments have come when talking to landlords about considering settlement offers. Often, the landlord is so emotional about the debt he or she is owed that settling is not an option.
After 12 years of reviewing tenant debt accounts, I can tell you with certainty that landlords who seriously consider settlement offers recover much more money than landlords who don’t. If a previous tenant makes a settlement offer, he or she is looking to resolve the debt for some reason right now. Maybe he is trying to rent another place to live, or trying to obtain a mortgage or another loan. For whatever reason, he is motivated to pay you. If you ignore the offer, he may find another way to rent or get a mortgage or loan without paying you.  This may be your only opportunity to collect even part of what you are owed.
Always respond to the offer in some way, even if the previous tenant has made an offer that seems unreasonably low. Ignoring the offer, or outright refusing the offer, ends the negotiations and gets you nowhere. When you receive a low-ball offer, always make a counter offer. I suggest starting at countering with an offer of 70-80% of the balance.
In fact, I would take this advice one step further. If a collection agency was working to collect my debt, I would give the agency blanket authority to negotiate and accept settlements of 70% on the spot without my approval. The collector has a motivated debtor on the phone and the debtor wishes to settle the debt. Don’t give the debtor an opportunity to change his mind. If the collector must first contact you to authorize the settlement, wait to hear back from you, then contact the debtor again with your answer, you may have lost an opportunity to collect your money.
Make sure that any money you are paid clears and is in your pocket before you give the debtor a clearance letter. Occasionally a debtor’s goal is only to obtain the clearance letter. Once he has the letter, he could stop payment on the check or dispute the credit card charge, depending on the payment method. Your collection agency will know how to make sure the funds have cleared before they supply a letter. If you are collecting the debt yourself, I recommend you require a certified check. I once had a conversation with an attorney about a possible civil suit against someone who had no assets. My position was that regardless of the lack of assets, I wanted to sue “based on principle.” The attorney replied that “principle” is expensive. “Try making a bank deposit of principle,” he said. He was right. In principle, you are entitled to be paid the entire amount the previous tenant owes. It is your right to demand full payment. So, you may stand on principle and refuse settlement offers. On the other hand, if you seriously consider settlements, you will collect much more of the debts you are owed. Copyright 2009 Bill Gray
Bill Gray is a tenant debt collection specialist. For tenant debt concerns, email him at Bill@thelandlorddoctor.com. Visit Bill Gray’s blog at TheLandlordDoctor.com.
See our seven part series, Vital Tips to Increase Your Debt Collection. American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.
To subscribe to our blog, click here.
Are you certain your old tenant won’t pay his or her bill? Landlords tell me several times a week there is no way their previous tenant will ever pay what they owe. As I said in a previous post, if you have a The truth is nobody knows whether the balance will be paid or not. The one way you can make sure not to get paid is by putting his file in the drawer and leaving it there. Think about it. Your tenant moved out with the knowledge that you were owed money. The renter might not have known how much, but most likely understood it was some amount. After moving, the former tenant either hoped you would not go after the debt, or did not think you could. As a landlord, you have no idea of the renter’s complete financial and personal situation. Is the person’s father wealthy enough to provide a bail-out? Next year will the renter land a great job and decide to clean up his or her credit? Will the renter marry money? Will he or she attempt to get a mortgage and need squeaky clean credit to do so? If that person does try to get a mortgage, he or she will be begging you to resolve the debt. If you have a signed lease and can substantiate your charges with documentation, you may pursue the debt as a collection account for up to seven years. Usually this can be extended to ten years if you have a judgment. This is a long time for your tenant to live with your collection If you do nothing else, report the debt to Experian, Equifax, and TransUnion. It can be done in minutes and costs less than lunch. I seldom gamble, but this is a no brainer of a bet. It may take some time to pay off, but a small investment could possibly pay big! Send me a note with your tenant debt concern. I can help. Bill@thelandlorddoctor.com. Copyright 2009 Bill Gray Visit Bill Gray’s blog at TheLandlordDoctor.com. See our seven part series, Vital Tips to Increase Your Debt Collection. American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.
To subscribe to our blog, click here.
by Bill Gray
Often 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 costs all the more difficult. Often a landlord will simply hand the tenant a move-in checklist and say, “Let me know if you find anything wrong.” After the lease is signed, the landlord and all tenants who signed the lease must inspect the rental unit together. With everyone present, it is very important to meticulously inspect and document the entire unit inside and out. Perform the inspection with your new tenant by your side. Do not just let everyone wander around the rental doing their own inspection. Some landlords go as far as using a urine stick to show there are no pet urine stains in the carpet. I encourage you to check for pet urine before move-in, and I highly recommend it upon move-out. Make sure your move-in/move-out inspection sheet has room to document the condition of every area of your rental. It also must have spaces where you and your tenant sign the checklist both during move-in and move-out. Take pictures of the general condition of the rental, especially of any area that may be disputed when the tenant moves out. Digital cameras make storing these photos very easy. By inspecting the rental together and both signing the inspection sheet, you are sending a very clear message to your tenant without speaking the words: “I expect you to take care of my rental unit; if you don’t, you will be held accountable.” Before you hand over the keys, perform a detailed move-in inspection with your tenant. You will increase your profit by minimizing the risk of debt when the tenant moves out. Bill Gray is a tenant debt collection specialist. He offers discounts to AAOA members. For help, see Tenant Debt, or email your questions to Bill@thelandlorddoctor.com.
American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.
To subscribe to our blog, click here. by Bill Gray
Do you keep a conversation log with your tenant?
Do you file correspondence from and about your tenant?
Probably not.
In fact, many of my collection clients don’t even have a valid forwarding address! The easiest way for a tenant to avoid paying your debt is to leave without a trace.
So, first and foremost, if you want to maximize your chances for tenant debt recovery, get the right DOCUMENTATION UP FRONT:
Always hire a collection agency that requires full documentation at the time the files is placed for collection. This way when documentation is required down the road, the agency already has it. Keep your collection files out and in a place where you can easily get you hands on them, should you need to. Throwing them in a box in no particular order and placing the boxes in a shed just won’t work for a landlord or property manager serious about collecting debt!
Bill Gray is Director of Marketing with Rent Recovery Service, a national collection agency specializing in tenant debt collection.
See our feature, Are You Leaving Money in Your File Drawer? Let us know what you think by commenting below. For questions about our blog, contact our editor at kim@joinaaoa.org. American Apartment Owners Association offers discounts for landlords on products and services related to your commercial housing investment, including real estate forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
 We’ve brought you dozens of money saving tips over the year. Here’s a countdown of some of the best technology and money making ideas of 2008, so you can save even more in 2009:The simplest, easiest ways to lower your costs:
1. Over liners. These drip-catching, energy saving liners are CHEAP, and save you a bundle. See Make Oven Cleaning a Thing of The Past.
2. Recycling electricity. A simple appliance can save you as much as 25% on energy costs in your office, common areas, and rental spaces.
3. Keyless entry systems. No need to re-key each time a tenant moves out, plus an easy way to provide security when vendors need to come on site. For more, read Keyless Entry, 5 Ways to Save Money.
Put Money in Your Pocket, and a Smile On Your Face:
4. Part-time rentals. Are you away from home part of the year? Do you have a get-away home? Find out how you can rent part-time without paying out in taxes. See Put Part-Time Rental Cash in Your Pocket.
5. Tenant Debt Collection. Do you have old, uncollected tenant debt? You need to read Are You Leaving Money In Your File Drawer?
6. On-site Vending Machines. From beverage delivery to tenant recreation, these machines can offer landlords additional income. Check out the possibilities in Vending Machines Bring in Extra Income.
7. Common area laundry. Not only an environmentally sound choice, but a great way to earn a little income and save on burdensome maintenance repairs. See how it works in Are You Taking Advantage of This Revenue Stream?
Reap the Rewards of Proper Planning:
8. 1031 Exchange Fees. Using an exchange agent who pays you interest on your funds can pay for your exchange fees. Find out how in Interest on Your Funds Can Pay for Your 1031 Exchange.
9. Avoiding over-insuring. Don’t throw money away on a too-beefy property insurance policy. Learn more in Over-Insuring Is Killing Your Profits.
And last but not least, use preemption to avoid costly tenant disputes:
10. Minimizing tenant property damages. You have options when facing a messy tenant eviction. Learn more in How to Evict Tenants Without Property Damage.
American Apartment Owners Association offers discounts on products and services related to your commercial housing investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
To subscribe to our blog, click here.
Tenant debt collection expert Bill Gray is seeing a disturbing trend: “We are getting more and more collection requests from owners who inherited the existing tenants from the seller,” Bill explains. “Problem is, all they have is the lease. They don’t have the information we need for collection. Sometimes they don’t even have the debtor’s Social Security Number.” (more…)   Add Super Saver to any membership for only $ 19.95! 
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This report will:
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account negatively affecting his or her credit!
With over 10 years experience in the apartment collection business, I can tell you the best ways for a deadbeat tenant to rip you off.
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