Put Ducks in Row For Rent Collection

GLENDALE, CA-Rent collection is often a well-oiled machine, but sometimes there are glitches that require hands-on action from landlords. If you have the proper measures in place to handle those inevitable glitches, the process of collecting delinquent rent payments can be easier on you and more likely to produce results, Clint Sallee, president of Fidelity Credit Service, a collection agency here, tells GlobeSt.com.

“In property management, what will happen is someone will break their lease, disappear and have outstanding rent, or in some cases the landlord has to get them evicted and needs to collect what's still owed them in the lease,” says Sallee. “On the residential/multifamily side, someone may be fulfilling the terms of their lease, but sometimes they're leaving the property with more damage than the security deposit will cover. The landlord often has limited means to go after them, so they may go to small claims court or come to us to turn it over as a delinquent account.”

Sallee says he always advises clients to try to collect delinquent payments on their own. “If they see a way to set up a payment contract with their debtor or some sort of payment plan, that's always going to be the best solution. It's the cheapest solution for the creditor and the fastest way to get the most amount of money.”

Unfortunately, trying to collect the money on their own doesn't always work, and landlords will have to consider either hiring an attorney or taking the case to small claims court, which has its own misconceptions. “They think that when they win and the judge bangs the gavel, the other side pulls out their checkbook and makes everything right, but it doesn't always happen that way. They can try small claims court, but more often than not, the case is assigned to a collections agency when the creditor gets the judgment and the debtor doesn't pay.”

It's important to get your ducks in a row before any of these scenarios takes place. Sallee recommends gathering good, thorough information about the tenant up front. “The more sophisticated the landlord, the better the data they gather: picture IDs, Social Security numbers, checking account numbers. They're making sure the tenant honors their commitment.”

If a tenant doesn't pay, don't rely on a snail mail letter to communicate with them—use the preferred communication method of the tenant. “Every attorney in the world says to send them a letter,” says Sallee. “That was good for communicating debt 40 years ago, but not anymore. You need to communicate with the debtor in the form they are used to—whether it's text message, voicemail, email or smoke signals. They'll be more responsive in that medium because you're communicating on their terms. A lot of people don't do that, and it's just a mistake.”

Sallee recommends not being afraid to escalate the situation if the tenant doesn't respond to requests for payment. “Often, you'll get promises but no results. Don't wait until they move out of the area—try to do what you do before it goes on for too long. People wouldn't tolerate broken promises in their personal life, so why would they tolerate it in their business life?”

Lastly, Sallee recommends having all your resources lined up before you need them. “The last thing you want to do is try to figure out what to do if your tenant doesn't pay rent. Prepare for it, protect it and be ready to go after it proactively. If you're a new landlord, don't be surprised by it.”