I SPEND HALF A MONTH COLLECTING RENT!

14 Replies

Hello Community, Im looking for advice.  I currently am burning the candle at both ends, running around so much and in turn, loosing efficiency in my rental business.  I currently have 18 doors (rented), 30-35 storage unit doors (rented), and a masonry company.  I just picked up my most current tenant for a 3br yesterday.  It is the 13th and still have 4 tenants to collect from and idk how many storage tenants to collect (I think like 8 units). 

I am looking for advice, I know Im doing things I shouldn't be doing.  Im not staying on top of late tenants with notices and multiple phone calls, Im making deals with tenants about when they can pay, have become more friendly with a few, etc.  Bottom line is I am breaking my own rules due to having too many doors to self manage.  I know theyre taking advantage of me, but based on whats going on, I put things in order of importance, and the rentals fall by the wayside at times.

I took the next step in interviewing with a secretary/ accounts manager.  She has over 20yrs experience, and wants $13/hr.  I have 10 in a concentrated area, that I think I am going to turn over to her. 

Since Ive never hired someone like this before, what objectives should I strive to her?  What should I look out for, should I have her be constantly calling late tenants and not just letters?  Thanks, Im stressed..   

Definitely need to hire someone. I was in that same predicament when my wife lost her corporate job and I decided to bring her in as my PM. She is ruthless and doesn't take any excuses from tenants. I offer her 1/2 of all late fees she collects and just last month we collected nearly $800. We have 30 SFH rentals (spread all over DFW), currently 2 properties on market, 1 rehab and my construction company so my time is better spent elsewhere.

Yeah man I completely agree, I spend so much time listening to tenants BS, sob stories, and gossip, I hate it because I, like you, have much better use of my time elsewhere.

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I think you are looking to solve the wrong problem.

Actually, you are not even looking to solve the problem: you are looking to pass the problem to someone else and pay them for that.

Tenants are like kids, they quickly figure out your boundaries and then expand them. I bet you did not start with tenants paying in the middle of the month - they trained you to do that. My tenants tried to do it with me too.

After I served them twice with "3 day notice to pay or quit" on 6th day of the month, they started paying their rent on time. Actually not really on time (my rent is due on 1st and late on 6th) but by 5th I have the rent check in my hands.

The first time it happen the tenant told me they are going to be late with the rent by 2 day(technically late by 8 days but who is counting) I told them that as long as I get my check by 9th it should be fine. They were surprised by my "3day notice" served on 6th but I told them that this is to protect my interest and that I am not filing with the city until the 10th of the month. Surprisingly I got my rent the very next day.

I also give my renters "an early bird $50 off coupon" if I get their check 3-7 days before the 1st of the month and 80% of them always pay it early. $50 may look a lot to you but my doors are rented for $1,700 to $2,000/month. For me this is a small price to pay for the convenience to sleep well at night.

You have to train your renters instead of letting them train you.

@Justin Escajeda  you are absolutely crazy for picking up rents and listening to sob stories and you solution is backwards. 

Auto Debit is the answer. ClearNow or Erentpayments offer debiting service. The service works like this. When the tenants sign the lease they sign up for the service. The service debits their bank accounts on the 1st business day of the month and then deposits the funds in my bank account 3 business days later. If the tenants don't use this they pay extra.

If your tenant's don't have bank accounts (low end) then find a bank close to them and open an account there. Give the tenants the account info and require them to deposit rent into it by the 1st. No rent the post notice. In about a year you will have not headaches.

I have more units than you and about the same number of properties. I drove zero miles to collect rent this past month. All my rent was in the bank on Jan 7th. All but 2 checks showed up in my bank account like magic. One was a new tenant that I collected when they moved in back in Dec and the other is an old time LL that rents one of my units for his handyman. 

You have trained your tenants to behave in this manner. Now you must untrain them.

Finally you are putting yourself at risk by collecting rent in person. You could get robbed or a tenant could twist off and take it out on you. 

Do some reading on this site as there are multiple posts on this topic and the search button in the upper right hand corner offers a great means of locating those posts.

May you quickly return to the land of happy land lording. 

Thanks @Bill S.  you are right, I no doubt created this monster over the last year in particular!  I knew Id be getting a lot of criticism from this post, but admitting you have a problem is the first step, lol.  I do like the idea of a near by bank, thanks for the great idea!

You have passed the point where you need to hire a property management company. When you only have a handful of rentals, it makes sense to do it yourself. But once you move past the 10-15 door range, it makes more sense to outsource the management.

@Justin Escajeda   in our area we write leases for $150 more than market, (we advertize the unit at market rent but we explain the tenants about the rent discount if they pay on time) and we discount the rent by $150 if they pay on of before the 4th of each month! 

     This is very effective as almost no one is ever late! This way now we only "collect" rent for 4 days a month!

      Also we gave the tenants our Business Bank Account Number and they deposit the rent they just write the address on the deposit slip(we can see copy online from the bank). If they send me a check than they must pay me $13 handling fee for each! So now i no longer collect rent either just verify the amounts. 

Check make sure this is legal in your area. In our area this works fantastic. I personally tested the rent discount in court and it did work!

Good Luck!

@Val Csontos  , yeah Im not 100% sure about the specifics of lease laws in PA, but I did learn in a landlord/property management class years ago that late fees (even if on lease) will not hold up in court.  However, if you have a discounted rent for paying within a certain time frame, that is perfectly legal.  All about the language in the lease I suppose.

I think one of the most important things you have to remember is that you are running a business. 

In any business in order for it to succeed you have to have a business plan , you have to policies and procedures not only in place but followed. 

So the question I think you want to ask yourself is do you have these in place are they being followed by both you and the tenants? if the answer is no then you may want to fix that before you hire someone without any clear direction.

@Justin Escajeda   I bought a storage / commercial building  44  10 X 20's and 7k sq ft of office above.  the storages were a pain.. not so much collecting rent... but having to re lease them.. my world headquarters was 40 minutes away.. I did not want to send staff over there to show a potential unit and blow 2 hours of their accounting duties or other duties.. It was a rough one.

I came to understand if I ever buy another storage facility it needs to have onsite management that is their during business hours.  anything that is too small to afford that is tough.. Unless of course I had worked from that space it would have been cake.. but I did not.

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As mentioned in previous posts, tenants will push your boundaries as far as you let them.

I recommend that you make rent due on the 1st, with no grace period. If you have a grace period until the 5th, then rent is really due on the 5th.

I have a late fee of $100 if rent is not paid on the 1st, and a $50 discount for paying through auto draft. 95% of tenants pay on-time through auto draft, because that's what they're incentivized to do.

I had one tenant that I inherited that was used to paying late and not including the late fee. When it came time to renew their lease, I told them that I wouldn't renew unless they caught up on all their past due late fees. They paid $600 to get current, and haven't paid late since.

It is all to common to hear landlords complaining of rent collection issues due to the reasons Juston has given to explain his problems. All of the problems are created by the landlord not the tenants..

The key is not to waste time chasing tenants but instead to train them properly from the beginning. Strict enforcement of the requirement for tenants to pay in full and on time is crucial, Along with the  clear understanding it is the tenants responsibility to insure rent is paid, a landlord should never pick up rent checks or chase tenants for rent. 

Late fees followed by eviction if a tenant pays late more than once. Eventually you end up with all tenants insuring you have all your money on time without ever calling or chasing.

My tenants are explained the rules initially, when they pay late I charge a fee and explain another late will result in an eviction. A second late results in a eviction notice and I reluctantly withdraw it when they pay with a late fee. I have never had a tenant pay late a third time.