This is part of a series of automation projects we’ve implemented for our buy-and-hold real estate business. This post will show you how we’ve automated our delinquency report and follow up with delinquent tenants.
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We have a bunch of mobile home and land properties that serve the lower-income demographic who consistently live paycheck-to-paycheck. As we’ve accumulated more and more properties, the tasks of following up with delinquent tenants, setting and managing payment plans, and handling the whole process of filing evictions through eventually having the sheriff involved (if necessary) to escort the tenant out became too much for me to do. So I outsourced it to a couple people on my team.
This was better (for me!), but it’s still a tough task. We use Appfolio as our property management software, and it has a delinquency report that is fairly customizable. It’s good about showing all tenants who owe more than $x amount, but I wanted to see a report of everyone we’re evicting, those recommended for eviction, and those who are delinquent but not yet recommended for eviction.
With some custom automation, we have a script that does just this. It runs three mornings per week and posts three lists like I previously mentioned into Slack (our hub for team communication). It also includes any tags (like information on a payment plan), as well as a link to their Appfolio tenant page.
Here’s a quick sample of what it looks like:
- John Red (101 Main St) owes $750 (1.5x monthly rent); last payment $500 on 10/1/17; promised to pay $300 every 2 weeks beginning 1/1/2018; link to tenant page
Recommend for Eviction:
- William Orange (102 Main St) owes $700 (1.4x monthly rent); last payment $500 on 10/5/17; hasn’t responded to texts or emails; link to tenant page
Delinquent but not yet Evicting:
- Susan Yellow (103 Main St) owes $250 (0.5x monthly rent); last payment $250 on 12/1/17; link to tenant page
The “x monthly rent” number above is the tenant’s balance owed divided by his monthly rent. Our rents vary from $150 per month for lot renters (own their own home but are renting the land from us) up to $1,000. By seeing the number of months late instead of just balance owed, you can identify your problem tenants more quickly. For example, a lot renter who pays $150 per month but owes $450 is generally in a more problematic situation than the tenant who pays $1,000 per month but owes $500.
The script as we have it set up looks at the number of months late, day of the month that the script ran, last payment amount and date, and whether or not we have a button checked that we’re evicting a tenant.
Contacting Delinquent Tenants
It’s important to persistently contact delinquent tenants to remind them that rent is due and that an eviction is in progress or upcoming. Several reminders per month spread out over emails and text messages have led to more tenants contacting us to schedule payment plans leading to fewer tenants leaving or evicted.
Here’s an outline of our automation:
- Appfolio is configured to send out reminder emails a couple times per month.
- We have up to two text messages sent out when late fees begin and when the eviction is upcoming based on the day of the month and amount owed asking the tenants to contact us to schedule a payment plan.
- We send out a text message when the tenant’s name appears on the recommend for eviction list (sent at most once per month) reminding them to contact us before we begin the eviction.
In the meantime, we’re also contacting manually anybody who hasn’t responded to our messages.
- We send out a text message when a tenant bounces a payment (and lock out their online Appfolio account until they discuss the situation with us).
- We lock out their online Appfolio account automatically when they’re a few days away from their eviction court date so that any payments made must be in certified funds.
- We also send tenants a text message near their court date offering cash for keys (we give them money in exchange for them leaving the home in good condition).
I hope this gives you some good ideas to improve your delinquency. Please don’t feel like you need Appfolio or Slack to do this. Reach out to me if you’d like assistance in getting this set up.
What steps have you taken to automate your tenant management?