Your Regular Late Rent Payers Do Not Have a Money Problem!

Thursday, December 07, 2023

Is this statement questionable? Maybe you think I am misinformed?

As a property manager with over 15 years of experience, I have for years dealt with late rent payers at every level. I am not talking about people who rarely and genuinely get behind, but those who are consistently in rental arrears. After dealing with so many late rent payers, and after observing their circumstances with which they became so habitual with late rent payments- a clear pattern became evident.

These ‘serial offenders’ did not have a money problem!

You would think that they could not pay their rent because they hit financial hard times, or they lost their job, or perhaps an injury forced them out of paid work for a time. I found this was not the case!

What I did find is that they all had some type of regular income. Whether it was Centrelink benefits, rent relief, or paid work, they had an income paid to them weekly or fortnightly. Other regular late rent payers were even in executive positions and other well-paying white collar jobs. They all had one thing in common- they all had a regular on-time income!

It was clear that the reason tenants got behind in their rent was not due to a lack of income. It hit me hard; they didn’t have a money problem, they had a priority problem! They just didn’t believe paying their rent on time was a priority!

If we believe that our rent is top priority over everything else, the rent would be paid on time. If we believe ‘other things’ are more of a priority over our accommodation requirements, then the rent would be a lower priority, and will not be paid on time!

Have you got tenants like this on your rent arrears list? Take a good look at your rent arrears list.

How many are genuine?

Firstly, look at your rent arrears list and count how many tenants are ‘genuinely late’. A good definition of ‘genuine’ tenants is that they are hardly ever late, have phoned you a few days before they were due, and have given you a commitment when they will pay. How many of these fit these criteria of ‘genuine’? I reckon you couldn’t even count 10%!

So who are the rest of the tenants on your list? Take a guess- they are your 'serial offenders’!

So how do we deal with this type of tenant? How do we change these people who seemingly have a ‘priority problem’ to where they will pay on time? Firstly, we must only use the strategy that is effective and is aimed at changing their attitude. We must implement Zero Tolerance strategies.

Here are some tips:

Impact Letters –
Get rid of standard letters that only ‘remind’ that rent is late. Tenants know they are late- so why send them something they know anyway! Use only letters that have an impact. And only use them once.

‘Wake Up’ Phone Scripts –
Develop scripts that are designed to wake them up from their attitude. Be specific and bring attention to their real priorities.

Effective SMS Scripts –
send them reminders on their mobile phone when they are 3 days behind- everybody reads their text messages (this type of messaging will definitely get you a reaction!)

Hit First Offenders Hard –
When they first pop up on your list, call them when they are only a few days behind.

Quick Follow Up –
If they gave you a date of commitment when they would pay, and how much, if they don’t follow through- call them straight away.

Be Persistent And Consistent –
I firmly believe in the ‘barking dogs’ method. Barking dogs get fed first! Call them every time they get behind and insist they must pay on time- always!

Your determination is the only thing that will work!

Hit your arrears hard all the time and you will win the battle!


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