How to Collect Past Due Rent
The first thing you need to do is send out a statement to any tenant who owes any money. This seems like such a simple thing but many landlords do not send out any statements. They think that the tenant knows on his/her own how much they owe. I repeat: The first step in collecting rent is to send out a statement to any tenant who owes any money. Even if it is only one penny. (well, perhaps not a penny) but $1.00 should be the cut off for sending out a statement for when they owe money. You may think, “They paid everything except the late fee, why bother they will pay it next month.” but the truth is that you have a much higher probability of getting paid if you send out a statement. The other reason for sending out statements when they only owe a little is this. If someone owed you $50 or $5,000 which amount do you think they would have on hand to pay you. Of course it is the $50. If you ask someone for $50 they will probably have it and be able to pay you right away. Most tenants I know do not have $5,000 to save their life, so the goal is to never let the amount they owe you get too high. Get your money when they owe you a few bucks. If you wait till they owe you 2 months of rent the chances of getting it are slimmer. Here is another thing to consider. Most places in our area charge one months rent and one month’s deposit to move in, so if they are more than two months behind it is cheaper for them to move than to pay you. You should never let them get more than one month behind. Once they have skipped out on you and trashed the place collections are nearly impossible. (Not impossible just nearly impossible.)
The next thing to do is call them on the phone. Every person who owes any money even if it is only a late fee should receive a reminder call. Be polite and cheerful and say for example: “Hi, This is Vera from the real estate office, I am just calling to let you know that I did not receive your payment this month. Please deposit $$$$$ at your earliest convenience.” I always tell then the exact amount they owe. If they made a partial deposit I say, “I got your payment of $$$$ Thank you for that, but you still have a balance of $$$$ (again the exact amount they owe.) You are not the only person vying for their money. People who are behind in the rent are usually also behind in many other bills and “The squeaky wheel gets the oil.” You are competing against all the other creditors who want their money also, so you must be the squeaky wheel and call them if you want to beat out your competition of the other creditors. If they do not have a phone that works, I always send them a letter asking for their phone number. I have form letter in QuickBooks that I can print out in two minuets and mail to them asking for their phone number. My lease states that I must always have their phone number in case of emergency. You can mention that in your letter. I also put in the notes the date and time I called them and any notes. It is good to keep a record of how many times you have called them. I know if I have called them many times with out results it is time to take harsher action.
The next step is a 3-day notice to leave (The number of days is different is different states so you need to look up the laws in your state.) I used to drive around and take the notices to them myself or hire one of my workers to do it thinking I was saving money, but it was false economy. I would take days to get them there and then I would have to redo them because the dates were wrong. The cheapest and most efficient way is to hire a courier service. I can get one delivered for around $20. If you count your time and gas it is not worth it. They can do it for that price because they are delivering lots of things all at once so it is cheaper for them. I could see it if you owned one or two properties right around the corner but more than that just bite the bullet and hire a courier service.
The three day notice is very effective and prompting phone call. You will get several different types of responses. once you are experienced you will be able to interpret instantly which category the response falls in.