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:

• 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. 
• 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.
• 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:

1. Go To:  http://www.rentrecoveryservice.com/
2. 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.

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. CLICK to Leave a 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.”

Read the rest of this entry »

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:

Read the rest of this entry »

Posted by Kim Ezzell on 02.27.2008. 3 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.

Read the rest of this entry »

Posted by Kim Ezzell on 02.19.2008. 2 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. CLICK to Leave a 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. 1 Comment »

Filed under: AAOA Forum, Collections

TENANT BACKGROUND CHECKS: How-To Tips for Tenant File Maintenance

Screening the tenant before you rent is only half the battle. Circumstances can change, and your ideal tenant can become a potential rent collection problem. Maintaining a current and complete tenant file is a simple way to protect your valuable investment. 

Remember, the sooner you are aware of a potential problem, the sooner you can gain control and minimize your losses.

Here are some tips for Tenant File Maintenance:

Track Changes in Payment Method.

• If a personal check is used, photocopy it each month.
• Note changes in names on each check. Relationship changes are the single largest cause for failure to pay rent.
• If you do need to take legal action, your diligence would not be wasted. The bank information will be crucial in helping to recover your money judgment.

Track Changes in Employment

• Require your tenant to update you when their employment status changes.  Note the new employer’s name and address.

Credit Report Updates

• A basic credit report should be run every 12-24 months on each tenant. This is an inexpensive way to see if he has been paying bills on time, going into more debt, and may even indicated if he has been shopping for another apartment or even a mortgage for a home.

American Apartment Owners Association offers discounts on products and services related to apartment management, including tenant debt collection, tenant background checks, technology, insurance and financing.  Find out more at www.joinaaoa.org.

For more information on Tenant Background Checks, see our interview with Fidelity Information Corporation CEO Jeff Cronrod,TENANT BACKGROUND CHECKS:  LITTLE KNOWN WAYS TO AVOID COSTLY MISTAKES. This exclusive interview is included 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 exclusively through the American Apartment Owners Association. To purchase a copy, visit www.joinaaoa.org.  Join as a PremiumPlus member, receive all the benefits of membership, and this CD series is our gift to you.

For tips on how your tenant background check can affect your chances for recovery of unpaid rent, check out our series on the blog “Seven Vital Tips to Help You Collect Your Tenant Debt”.

Have tips to share?  Please post your comment.

To subscribe to our blog, click here. 

Posted by Kim Ezzell on 01.17.2008. 1 Comment »

Filed under: AAOA Forum, Collections, Credit Screening

Seven Vital Tips to Help Collect Tenant Debt - Part Seven of Seven

Seven Vital Tips To Help You Collect Your Tenant Debt - Part Seven of our Seven Part Series

by Bill Gray, Fidelity Information Corporation

Take advice from someone who knows the tenant debt collection business:

Your debt recovery may depend on what you do before the tenant moves in!

Get the right information from your prospect before they move in, and you will always increase your chances for debt recovery on the back end.

TIP NUMBER SEVEN

Signed Move-In Statement.  Congratulations, you found a new tenant!  No need to walk through the unit - we’re all friends here, right?  Wrong!  For both your and your new tenant’s protection, walk through the unit with them before they move in.  Make accurate and legible notes about the condition of the unit. ”I wish I had a nickel for every debtor who says the apartment was cleaner when he moved out that when he moved in.” A signed Move-In Statement can prove him wrong. 

Miss the other tips in our series?

Click here for TIP ONE  

Click here for TIP TWO

Click here for TIP THREE

Click here for TIP FOUR

Click here for TIP FIVE

Click here for TIP SIX

In need of tenant debt collection? Call 303–449–4533 or send an email to collection@joinaaoa.org.  Write the word “COLLECTION” in the subject line. 

Premium and Premium Plus members receive discounts on debt collection. Sign up now, or upgrade your membership to enjoy the savings. 

Premium Plus members also receive a copy of Real Estate Investment Secrets, twelve interviews with industry leaders, including “How to Collect Debts When Your Tenant Leaves Owing You Money” by Jeff Cronrod, CEO of Fidelity Information Corporation.  To find out how to purchase Real Estate Investment Secrets,visit www.joinaaoa.org.

Posted by Kim Ezzell on 12.07.2007. 6 Comments »

Filed under: AAOA Forum, Collections

Seven Vital Tips to Help Collect Tenant Debt - Part Six of of Seven

Seven Vital Tips To Help You Collect Your Tenant Debt - Part Six of our Seven Part Series

by Bill Gray, Fidelity Information Corporation

Take advice from someone who knows the tenant debt collection business:

Your debt recovery may depend on what you do before the tenant moves in!

Get the right information from your prospect before they move in, and you will always increase your chances for debt recovery on the back end.

TIP NUMBER SIX

Background Check Co-Signers.  One way to rent to someone with questionable credit or rental history is to require a co-signer. But avoid the common mistake of accepting a co-signer without checking their credit and rental history. It is crucial to collection to have the co-signer complete a rental application and sign an iron-clad agreement.  In fact, it is extremely important for every adult moving into the apartment to complete an application and sign the lease.  This gives you far more leverage and ability to collect any future debts.

Miss the other tips in our series?

Click here for TIP ONE  

Click here for TIP TWO

Click here for TIP THREE

Click here for TIP FOUR

Click here for TIP FIVE

Come back soon for Tip #7 - we will be adding a new tip every week.

If you would like to be notified of new tips, please subscribe to our blog by clicking the box in the upper right side of the site.

In need of debt collection? Call 303–449–4533 or send an email to collection@joinaaoa.org.  Write the word “COLLECTION” in the subject line. 

Premium and Premium Plus members receive discounts on debt collection. Sign up now, or upgrade your membership to enjoy the savings. 

Premium Plus members receive a copy of Real Estate Investment Secrets, twelve interviews with industry leaders, including “How to Collect Debts When Your Tenant Leaves Owing You Money” by Jeff Cronrod, CEO of Fidelity Information Corporation.  To find out how to purchase Real Estate Investment Secrets,visit www.joinaaoa.org.

Posted by Kim Ezzell on 11.30.2007. 4 Comments »

Filed under: AAOA Forum, Collections