As a DIY property manager, it’s up to you to follow up when a tenant doesn’t pay their rent. According to The National Multifamily Housing Council, an average of 20 percent of households don’t get their rent in on time. The COVID-19 pandemic has only worsened this situation. Currently a third of renters are behind on their payments and 6 million households are in rental debt. There are organizations, like the Oregon Emergency Rental Assistance Program and the Landlord Compensation Fund, that help bridge this gap. However many small landlords are still navigating how to address the rent their current or previous tenants still owe. The cost of these financial setbacks can quickly add up. Small landlords especially rely on timely payments from a smaller number of tenants. As a result, they’re less able to absorb the cost of missed rent. If you’re a DIY property manager struggling to collect unpaid rent, here are a few things to keep in mind as you manage the collections process.
Collections Begin With Your Lease
Before your new tenants move in, you’ll have created an ironclad lease that outlines your expectations of the renter. If the time has come when your tenant hasn’t paid their rent on time, the first step is to revisit their lease and identify what steps it allows you to take.
Payment Dates: Your lease should identify the rent due date, the total amount per month, and accepted forms of payment.
Late Fees: If stated in your lease, you may be able to charge your tenant a late fee for not turning in their rent on time. Other fees may involve a certain percentage of rent charged per month left unpaid, instead of or in addition to a flat rate. Keep in mind that Oregon restricts some aspects of late fees. And the amount you charge must remain compliant with state legislation.
Other Consequences: A lease should also specify consequences other than fees, such as collections and eviction.
Once you’ve determined the provisions established by your lease, you can move forward with the collection process.
Reach Out to Your Tenant
If the tenant who owes you rent is still living at your property, this should be straightforward. In many cases, reaching out to your tenant in a friendly manner is all it takes to ensure they pay the balance due on their rent. In other cases, your tenant might explain why they’re late on their rent and ask if you’re able to work with them to establish a payment plan so they can catch up. Even reliable tenants can suffer an adverse life event, such as injury or unemployment. These situations may impact their ability to pay rent on time. It’s often in a landlord’s best interest to work with a quality tenant to help them get their payments back on track. As a DIY landlord you can decide whether you have that flexibility.
Contacting tenants who have since moved out of your property can be more difficult. If you still have current contact information for your tenant, you can begin by reaching out that way. In cases when you have no current information, you can request an updated address from the U.S. Post Office. Write a letter with “Return Service Requested” printed clearly on the exterior, and USPS should return the letter to you with the person’s updated address. If you still cannot get in touch with a previous tenant, you may have to resort to more time-consuming measures such as reaching out to known friends or family, employers, or checking the court system.
Unfortunately, a tenant may not intend to pay you back at all in some cases. Suppose you believe your renter doesn’t plan to reimburse you for what they owe in missed rents. In that case, you should serve them a legal notice which lists the amount they owe, the late fees and other financial penalties they may be responsible for, and the consequences–usually eviction–if they do not pay. In some cases, this official document can motivate a tenant to pay.
Small Claims Court
In a worst-case scenario, your tenant will refuse to pay even after being evicted from your property. Filing a case in small claims court can help you recoup missing rent, though not without difficulty or risk. While a court can demand a tenant pay their missed rent, the tenant can still refuse to pay. This can ultimately mean a lot of time, effort, and potential court fees wasted.
Collections Are Hard for DIY Property Managers
The fact of the matter is that collecting rents owed is a challenging and often unpleasant process. Most tenants rent in good faith and want to work with you to ensure their debts are paid off. However, that more positive outcome is not always the case. Collecting from a wayward tenant can quickly consume a DIY landlord’s time and energy. Eventually, they must decide between sinking even more effort into collecting missed rent or giving up on ever collecting.
In cases like these, working with a property management company means you don’t have to worry about collections. Rather than spending months chasing down an unpaid debt, you can sit back and allow your management team to handle all tenant communications, lease enforcement actions, legal issues, and rent collection. That’s why so many Portland landlords choose to work with Rent Portland Homes by Darla Andrews.
We’re the area’s premier property management company. We offer an all-encompassing service package designed to help once-DIY landlords make the most from their property investments. We know how stressful management can be when you’re going it alone. That’s why we value our team of experts and contractors with expertise on every level. From crafting a beautiful listing to our 48-hour maintenance guarantee, we take all the stress out of owning a rental. If you’d like to hear more about what Rent Portland Homes can offer, call or text us at (503) 515-3170 or drop us a line through the contact page on our website.