Multifamily Rent Collections in The Year 2021

It looks like the pandemic won't end at the beginning of 2021, or it may not even be over by 2022. And in December 2020 the decline in rent collections for apartments continued, as of December 10, rent collections were down 24% compared to March collections, according to a study by Rentec Direct. If you are a real estate investor, you become landlords for one reason, to generate great returns on investment, which lower rents collected can affect returns for your investors and yourself which can cause some uncomfortable conversations.

There is not much value with renting a property if your tenant isn't paying you rent, you can't just kick them out and change the locks. Bad tenants now are aware of this and will try to beat the system by skipping rent payments and then making a payment from time to time only to cancel the eviction process from the beginning. 

Even good tenants pay their rent late from time to time. People will try to find excuses or pay you late and when you try to collect them, they will make you feel like a bad person, but it doesn't have to be that way. With a smarter and more strategic approach to rent collection, you can increase your chances of receiving full and timely payment.

The COVID-19 crisis was unprecedented in many ways and government regulations on temporary bans on evictions have created real problems for many investors.

In the times likes these you should do this to increase chances in rent collections:

1.Create a payment plan.

2.Communicate with your tenants to make sure everyone is on the same page.

3.Study the laws and understand what legal restrictions you face.

4.Encourage installment payments.

Here are some techniques that you can use to make rent collection an easier and more predictable process:

1. Make payments automatic.

The best way to get tenants to pay on time is to require automatic rental payments through an automatic deduction system that transfers money from their bank account to your own, as it eliminates human error and excuses such as "I forgot" to pay.

2. Reward paying tenants.

Make sure you reward tenants who consistently pay on time as this will create a positive reinforcement system where tenants feel you are on their side. The reward can be monetary, such as cashback every time a renter makes consecutive rent payments on time or it can be a small gift.

3. Ensure compliance with your policy.

When a rule is broken and rent is paid late, you can't afford to give away with no cost, make sure to apply fees to your policy, it will show your tenant that you are serious about paying promptly. Sometimes it may require having an awkward conversation, but they are unlikely to do it again.

4. Never accept cash.

As a general rule, never accept cash payments for rent as this will create a lot of potential problems because if it does not give a paper trail, is non-refundable if lost, and maybe a sign of illegal activity. So just say no!

5. Screen tenants carefully.

It all starts with a thorough check before the ink hits the paper, as you can always lower your chances of getting non paying tenants by watching for warning signs in the beginning. That's why you must talk with their current and former landlords and check their income.

6. Always send reminders.

Make sure always to send reminders before paying, as simple as sending a text message five days before payment and on the day of payment is sufficient, as this will helps prevent tenants from “forgetting”.

If you thought about hiring a professional property manager this year who can collect rents effectively for you while helping to execute your business plan and increase returns for your property.