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Real Estate Resources
Welcome to the AAOA Forum, where we discuss the the topics our members want to hear and want to talk about. We like to take an active roll in the online community to help our members learn and help educate landlords new and old. We encourage you to participate and join in our discussions. Thanks.
Keeping Accurate Records Increases Debt Collection
by Bill Gray
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.
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:
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Completed application with at least THREE personal references, THREE business references, EMERGENCY CONTACT information, and copies of all documentation required with the application.
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A lease signed by EVERY ADULT in the unit. (Be sure to run a screen on every adult as well.)
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A log of EVERY interaction with the tenant.
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A copy of EACH rent check.
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.
To subscribe to our blog, click here.
Posted by Kim Ezzell on 04.09.2009. 2 Comments »
Filed under: AAOA Forum, Collections
Top 10 Money Saving and Money Making Tips of 2008
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:To subscribe to our blog, click here.
Posted by Kim Ezzell on 12.22.2008. 1 Comment »
Filed under: AAOA Forum, Collections, Going Green, Insurance, Make Extra Money
Avoid This Tenant Debt Collection Nightmare
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.” Read the rest of this entry »
Posted by Kim Ezzell on 07.31.2008. 1 Comment »
Filed under: AAOA Forum, Collections, Credit Screening
Are You Being Ripped Off By Your Collection Agency?
It’s tough when you get ripped off by your tenant. But it adds insult to injury when you turn to a collection agency for help collecting the debt, only to learn they are taking advantage of you.
How do some collection agencies take advantage of unsuspecting landlords?
In short…by not showing you how to collect the debt yourself before turning it over to them.
Here’s the skinny on collection agency tactics:
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Professionals in the debt collection industry know that a small percentage (5% -15%) of delinquent tenants will respond and pay immediately when they are contacted by a collection agency.
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Collection agencies are required to send a collection letter to the last known address of the debtor, before reporting the debt to credit bureaus. A predictable number of people will respond and pay their debt immediately, because they don’t want their credit to get ruined.
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The collection agency only spent a few dollars pursuing the debt, but you get a bill for 50% of every dollar collected.
Unscrupulous collection agencies call this tactic “creaming the easy ones”.
What they don’t tell you is…you can do this step yourself!
Here’s How to “Cream the Easy Ones” yourself:
- Go To: http://www.bestrentcollection.com.
- Click on “Flat Fee Based Collections”
It is free to register. You can send one collection letter for $16.95 or three for $26.95.
If the debtor does not pay, they will be automatically reported to the three major credit bureaus as part of the service.
The whole intent here is to generate a phone call from your debtor. If they do not call within 60 – 90 days, they probably won’t. THEN you can turn them over to a collection agency for collection on a contingency basis, and make the agency work for their fees!
Debt collection begins when your prospect walks through the door. Click here to read our series Seven Vital Tips To Help Maximize Your Debt Collection.
For help with debt collection, email collection@joinaaoa.org.
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.
Posted by Kim Ezzell on 06.02.2008. 1 Comment »
Filed under: AAOA Forum, Collections
OLD TENANT DEBT: Are you leaving money in your file drawer?
Our collection guru Bill Gray has some advice for you: If you have old, uncollected rent files, you may be sitting on a wad of cash.
“A lot of landlords just give up when the tenant skips and they can’t find a new address — they think that if they didn’t collect the unpaid rent right away, it’s a lost cause.”
“But that’s not the case. Old tenant debt can be an untapped source of cash.”
Posted by Kim Ezzell on 03.19.2008. CLICK to Leave a Comment »
Filed under: AAOA Forum, Collections
IS YOUR LEASE APPLICATION FALLING SHORT?
Find Out If You Are Making These Common Mistakes
Like a house built on a strong foundation, your rental application can make or break:
- Your ability to effectively screen your prospective tenant.
- The likelihood you’ll collect your rent.
- Your chances for recovery if you have to turn the tenant over for collection.
Is Your Lease Application Up to Par?
Compare yours to this checklist to see if you are leaving anything out:
Posted by Kim Ezzell on 02.27.2008. 10 Comments »
Filed under: AAOA Forum, Collections, Credit Screening, Forms
TENANT BACKGROUND CHECKS: What’s in a Name?
TENANT BACKGROUND SCREENING: What’s in a Name?
Although a prospect’s name typically is the first thing a landlord asks for, it is often incomplete on the application and lease. This presents a problem for enforcement of the lease agreement, evictions, subsequent collection efforts, and investigations.Make certain that you recorded the prospect’s full, legal name, including their middle name. This name should match all of the ID.
It is also important that the signature contains the full, legal name.
Posted by Kim Ezzell on 02.19.2008. 3 Comments »
Filed under: AAOA Forum, Collections, Credit Screening
REAL ESTATE INVESTMENT SECRETS: Part Ten of Twelve
HOW TO COLLECT DEBTS WHEN YOUR TENANT LEAVES OWING YOU MONEY
an interview with Jeff Cronrod, CEO: Fidelity Information Corporation
“The nature of tenant debt collection is very different than collecting other types of debts,” explains Jeff Cronrod with FIC, an expert in collecting tenant debt. ”With other types of debt, time is of the essence. You have a better chance of collecting a medical debt, for instance, if you collect it right away. The opposite is true of tenant debt. You will be far more successful if you wait it out until the tenant is back on his feet.”
“But often landlords don’t understand the value of their old debt files,” Jeff continues. “They tend to give up right away.” On average, it takes about 20 months or more to start getting payments on delinquent rent, and it could take much longer. “We’ve had files we’ve pursued for 16 or 17 years,” Jeff says.
Consequently, when interviewing collection agencies, landlords need to find someone who is willing to work that file for as long as it takes. There is some work involved in changing collection agencies if you hire someone who isn’t doing a good job for you, so it’s worth shopping around.
Jeff offers some tips for finding the right collection firm:
- Make sure they are licensed. Your best best is someone licensed in several states, because the tenants tend to move around. Ideally, you want someone who is able to chase them anywhere in the country.
- Look for ACA- American Collectors Association membership. This is the ethics board/bonding agent for collectors.
- Ask if they do rent collection. Many collection agencies do not.
“From there, look for someone who is willing to stick with the file for as long as it takes to collect it. Collection agencies are always looking for new, fresh accounts because that’s where the money is. You want someone who will not close the file while the debt is still valid, which could be a number of years.”
“And it’s always a good idea to get references,” Jeff adds.
Hear more of this interview, including an easy way to find out how long you have to collect your debt, the value of pursuing a judgment, collection agency fee structure, and some red flags when interviewing collection agencies, on the American Apartment Owners Association’s CD series, Real Estate Investment Secrets, twelve exclusive interviews with industry experts that will supercharge your ability to locate the best investment properties and manage or sell them for maximum profit. Real Estate Investment Secrets is available for purchase from American Apartment Owners Association. Join as a Premium Plus member, and receive all of the benefits of our association including Real Estate Investment Secrets free as our gift for joining. Visit www.joinaaoa.org for more information.
See our related story Two Secrets to Help You Save Money on Tenant Debt Collection.
Debt collection begins when you interview the prospective tenant. See our series Seven Vital Tips to Maximize Your Tenant Debt Recovery.
American Apartment Owners Association offers discounts on products and services related to your commercial housing investment, including tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
To subscribe to our blog, click here.
Posted by Kim Ezzell on 02.12.2008. 1 Comment »
Filed under: AAOA Forum, Collections
Two Secrets to Help You Save Money on Tenant Debt Collection
Two Secrets To Help You Save Money on Tenant Debt Collection
Many landlords hold on to their tenant debt because they believe the hassle of collection, especially the cost, outweighs the gain. Why bother when you stand to lose 50% of anything you recover to collection costs anyway?
But you may be able to collect tenant debts quickly, and much cheaper than that, if you know these secrets:
Secret #1
Collection companies earn the most for their efforts when the debtor responds from a few targeted collection letters. It’s the stubborn debtors (that take years of effort to collect) who are difficult and expensive for collection agencies. That’s simple enough, right? But few landlords know that a predictable percentage of tenant-debtors pay right away when they receive threatening letters from a collection agency. The letters alone cost the agency next to nothing, but they still charge the landlord the 50% contingency. That’s called “creaming the easy ones” in the industry, and its how collection companies thrive.
Secret #2
Sending out letters yourself doesn’t usually work too well. Many debtor-tenants don’t pay simply because they think they can get away it. You cannot get the same results as a collection agency – the tenants don’t take your actions seriously. Demand letters must come from a collection agency.
There is an alternative to contingency fee tenant debt collection. One national debt collection provider offers a “self-service” option, where the landlord can order collection letters. It’s as simple as entering the tenant information. This triggers a series from one to three demand letters from a well-respected tenant debt collection agency. If the debtor pays, you keep 100% of the recovery. And if they don’t? You can still turn the debt over for collection on a classic contingency fee basis. For more information on this flat-rate letter package, visit www.bestrentcollection.com and click on ‘Flat Fee Based Collection’.
American Apartment Owners Association offers discounts on products and services related to your commercial housing investment, including tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
For more on debt collection, read our series feature blogs, Seven Vital Tips to Help Collect Tenant Debt.
To subscribe to our blog, click here.
Posted by Kim Ezzell on 02.04.2008. 1 Comment »
Filed under: AAOA Forum, Collections
OLD TENANT DEBT: Are you leaving money in your file drawer?
OLD TENANT DEBT: Are you leaving money in your file drawer?
Our collection guru Bill Gray has some advice for you: If you have old, uncollected rent files, you may be sitting on a wad of cash.
“A lot of landlords just give up when the tenant skips and they can’t find a new address — they think that if they didn’t collect the unpaid rent right away, it’s a lost cause.”
“But that’s not the case. Old tenant debt can be an untapped source of cash.”
Even if the tenant didn’t have the ability to pay when he skipped on the rent, it might be worth pursuing him now that some time has gone by. He may have reestablished himself – he might have a new job, a bank account, and assets he doesn’t want to lose. “Often, delinquent tenants think they’ve beat the wrap after a year or so goes by,” Bill explains. “They’re surprised to learn the problem hasn’t just gone away. You can use that to your advantage to collect the old debt.”
The exact amount of time you have to collect a debt depends on the law of the state where the rental property is. “You might be surprised to learn the statute of limitations for debt in your state — it may be longer than you realize,” Bill explains. ”Many states have landlord-friendly rules for collecting unpaid rent – some give you as long as ten years to collect.”
It’s easy to find out if your old debt is still collectible. “It doesn’t take much time, just ten minutes or so to copy your file and send it out.”
Find out how far back you can collect in your state by emailing AAOA at collections@joinaaoa.org Please type “collections” in the subject line.
Read Bill Gray’s feature blogs, Seven Vital Tips to Help Collect Tenant Debt.
Check back next week to find out how you may collect your own debt and save a bundle on collection fees.
American Apartment Owners Association offers discounts on products and services related to your commercial housing investment, including tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
To subscribe to our blog, click here.
Posted by Kim Ezzell on 01.22.2008. 4 Comments »
Filed under: AAOA Forum, Collections