Collect the Rent An optimist builds castles in the sky, A dreamer lives there. A realist collects the rent from both of them! By Russ Sandlin If I were to tell you a group of managers in Tampa, Florida managing a total of 1,728 apartments in the first four months of the year, and a cumulative income collection 99.9% (this figure is not just rent collected, it is total lost revenue, including skips and evictions) you would call me a liar. I wouldn't blame you. However, after reviewing the actual numbers from these five communities, I can assure you this is true. How can this be? In the 22 years I have been involved in the operations and management of multifamily communities, I have never seen anything like this group of people. What strikes me most is the fact that their residents are as proud of their rent payment record as the managers are of their rent collection record. There are no strong arm tactics being used, there are no verbal or physical threats being made and Guido is not called in when the resident has a payment problem. Intrigued? Me too! During a seminar, I had the opportunity to ask these Outrageously Successful managers and the the equally "hot" district manager for the secret to their success. To my amazement, they told me and to my delight they said I could share it with you. So here is the secret to developing and implementing a 99.9% successful income collection procedure at your community. The first thing that struck m about these managers was they were dedicated to collecting the rent. Sometimes when you talk about rent collection with managers, they get this funny look on their face and they seem to want to go wash their hands. Like the process of rent collection was dirty, nasty, ugly job but someone had to do it. Well, these five managers have a much different attitude. Let me share a thought from the district manager's rent collection philosophy: Rule number one, you must maintain a positive mind-set. I recall a manager expressing to me that she was not successful in collecting the rent because she was just too nice of a person to do it. Too nice? We are all nice people. We don't hire people who are not nice! I'll admit that I would be suspect of anyone who told me the actually enjoyed knocking on residents' doors and asking for money, but we are professional people. This one of the responsibilities of our profession. Do not burden yourself by taking these matters personally. Develop a healthy "can do" attitude toward rent collections and see what positive results you can get. During our seminar, the Vice President of Residential Properties share his personal philosophy with me and told me why he felt this band of super managers were so successful. He said, "It ahs been my experience that most managers approach the rent collection process with the mind-set that the resident must pay the rent or vacate the premises. When the resident offers an excuse for not paying the rent, the typical manager resorts to Plan "B" and starts working on getting the resident out. This group of managers approaches the process from a totally different perspective. First of all, the start very early in the process, before the rent is past due. Secondly, when the resident offers an excuse for not paying the rent, this group of managers focuses on solution The help the resident develop a specific game plan to get the money It's not pay the rent or leave, that is too easy. It is simply, "Pay the rent!" This philosophy makes a lot sense to me. If you have a hard time grasping this concept, let me give you a specific example from on the managers: Recently a resident, who was in the process of changing positions, allowed his rent to become delinquent. (It is important to not that this community has a white collar, upper-middle class resident profile and this resident fit the profile perfectly.) The manager immediately started contacting the resident to determine why the rent was past due and when it would be paid. After some discussion, the residents assured the manager the rent would be paid in full by the 22nd of the month. The manager responded by telling the resident this was unacceptable behavior and need to get the rent immediately. The manager took time to remind the resident he had made a commitment to the manager when he signed the lease to pay the rent on the first of each month. The resident actually got his new boss on the phone with the manager and the resident's boss guaranteed the manager that the resident was, in fact, getting the new job and would be in a position to pay the rent on the 22nd of the month. The average manager in our industry would have ended the process at this point, accepted the comprise and allowed the resident to pay the rent on the 22nd of the month. Of course, not our superstar rent collector. She told the boss, since he was willing to guarantee that the resident would be able to pay the rent, the boss should loan the resident the money and the rent should be paid immediately. The rent was paid! There are a million stories in Collection City, this is just one of them. The point here is the attitude of the managers. So many times our managers adopt the attitude that they are the bad guy. They feel uncomfortable asking the resident to pay the rent when it is late. The Outrageously Successful managers, on the other hand, understand that the are the good guys. The resident has made a commitment to you to pay their rent, on time. Your provide the resident with a home, shelter, gas, water, trash collection not to mention all the extra services. There is not time when the manager can make excuses to the residents for nonperformance. We are out there every day doing our job in a professional manner. We should expect the resident to pay their rent...ON TIME! When they don't we have to be understanding (empathetic not sympathetic) to the point of helping them find a way to pay their rent. Working with them, not to delay payment over a longer period of time, but to create solutions to get the rent paid when it is due. It is this type of attitude that I encountered during my seminar and as you can tell by the free flowing adjectives, it pushed my button. These people are great! The following are several other innovative collections techniques which came out of the seminar: Get the leasing consultants to consistently get an emergency telephone number on every application. As a manager, never approve an application without someone to contact in case of emergency. If the rent is late and you are having a difficult time contacting the resident, use the emergency phone number. This is an emergency! Get the resident to use their Visa or MasterCard to get a cash advance to pay the rent, when it is due! If you have a clause in your lease that states the rent is due on the first but a late charge is not assessed until a later date (i.e., the fifth or sixth) remind your resident this dos not mean their rent is due on the later date. When the resident come in on the third or fourth and gives you a check, say to the, "We really appreciate the fact that you have paid your rent, however it is late. our rent is due on the first of every month." Tell your resident, if they habitually pay their rent late (that means after the first day of the month it will b reflected on their credit rating as a late payment This is especially important if you have a late payment clause in your lease agreement. The most effective form of rent collections is direct contact by the manger, with the resident. Simply hanging a late notice on the resident's door will not get you 100% collected. Call every resident when their rent is late. The morning of the second day of every month. Carry a list of late residents around with you. When you see them on the property talk to them about paying their rent. Don't harass them, be solution oriented. Counsel your resident and help them find creative ways to pay their rent. If a resident is not going to pay, get them out NOW! Don't wait! Take no prisoners. When a resident moves into your community, have them circle the initial lease where it says the rent is due on the first of each month. It is interest to me that as I have written this article and I look back over the text, there is a gnawing feeling inside that you will feel the ideas and techniques written here are tough... to difficult to implement...heavy handed... When you start to feel that way remember: If I were to tell you there is a group of managers in Tampa, Florida managing a total of 1,728 apartments, and is the first four months of the year they had a cumulative income collection of 99.9% (this figure is not just rent collected, it is total lost revenue, including skips and eviction) you would call me a liar. Success come in cans and not in cannots. I tip my hat to these superstar managers! Well Done! Russ Sandlin is the president of The Russ Sandlin Group, a nationally-recognized organization specializing in income-focused training and marketing for residential and commercial property. For more information on Resident Retention or other programs, call 800-535-8858. For additional information about the Russ Sandlin Group, visit us on the web: www.russsandlin.com or e-mail: theboss@russsandlin.com