Let’s face it Christmas is an expensive time of year for us all. If you are already struggling to keep up with financial commitments or haven’t planned ahead, it can cause a substantial financial burden that can take a long time to recover from. In property management, we have found this is one time of the year our rent arrears can really blow out.
It is unfortunate that with all the fun and festivities at Christmas keeping a ‘roof over your head’ is often a priority that gets shifted to the bottom of the list. The spin-off from this is that if our tenants aren’t paying their rent, a lot of our landlords aren’t paying mortgages and the financial strain mounts for all. At iThink Property, we have put together some strategies for dealing with rent arrears not just at Christmas, but any time of the year.
Top five tips for dealing with Rent Arrears blowouts:
1) Working as a team
At iThink Property, we like to take a different and ethical approach to all that we do. We understand financial strain has hit most of us at one time or another and while we have our landlord’s best interests at heart, sometimes life just happens. People lose jobs, relationships break down and coming up with the rent is hard. We encourage our tenants to work with us and be upfront about their circumstances, that way we can work out the best strategy to assist them. This may mean putting a payment plan in place or breaking a lease in extreme situations. We work closely with our tenants and landlord to come up with a strategy that is going to ease the strain for everyone.
2) Support services
One of the first steps, after communicating with a tenant and determining their unique situation, is to put them in touch with a number of support organisations. There are a few private, government and charitable organisations in the community that are very generous in times of real crisis and financial strain. Sometimes these aren’t overnight fixes but can provide much-needed assistance with a bit of patience. We also offer tenants budgeting tools and companies to help them manage debt and finances.
3) Clear expectations
From the minute a tenant signs their lease in our office, we sit down with them and outline our Rent Arrears Procedure. We have them sign off on it once the process is explained to them as part of our sign up procedure. At iThink Property, our rent arrears procedure includes:
– Day 1: SMS notifications to let the tenant know their rent is in arrears
– Day 3: Courtesy call
– Every day after Day 3: Call and SMS/email message, reminding them again
– Day 8: Tenants receive a Breach Notice if that is remedied within the time frame or a solution like a payment plan worked out we send a Notice to Leave.
We are very strict at keeping to this procedure, even over our office shut down periods, we have our Trust Accounts team addressing the banking and rent arrears.
4) Incentives
Who doesn’t love a challenge? Each year we put in place incentives for tenants to have their rent paid two weeks in advance. This is a requirement as part of their General Tenancy Agreement with us. These may include hampers at Christmas time or cash prize giveaway incentives, and we have found that our percentage of tenants ensuring they are two week’s in advance increases dramatically with these competitions in place. Depending on the incentive sometimes a small optional tax-deductable donation is requested from the owner and other times it is part of iThink Properties customer care initiatives, which are designed to foster great relationships with our clients and tenants.
5) Acting quickly
The best way to manage rent arrears is to act quickly. Don’t let it drag on, that’s when it really does become a big issue. Picking up the phone and communicating with tenants is essential, it is easy to ignore an SMS or email sometimes, but a lot harder to ignore a voice on the other end of the line. If your rent arrears procedure is to call at Day 3 and Breach at eight days you need to stick to this. It is also especially important to act quickly if you notice tenants who aren’t usually behind in their rent suddenly are. If a tenant is a constant re-offender and you are always having to follow and chase them up, acting quickly may mean giving them notice to leave and finding a new tenant.
To effectively manage rent arrears should be a daily process in any property management business and a clear procedure communicated with both landlords and tenants from the onset. At the end of the day, what could be more important than keeping a roof over your head?
For more detailed information on the property market and managing your investment, our iThink Property Real Estate Agents and Property Mangement Team in Ipswich and Toowoomba would be happy to assist.
iThink Property has a team of real estate agents in Ipswich and Toowoomba offering property sales and property management services. With a passion for people and property, iThink Property was conceived with the notion of building a team of good people to work in a real estate brand that did things differently. iThink Property focuses on transparency, communication, innovation and teamwork and has become a leading independent brand with unique points of difference. So whether you are thinking of buying, selling or renting, think iThink Property.
KYLIE WALKER – DIRECTOR – BUSINESS DEVELOPMENT & MARKETING
0439 895 808
Starting out with a career in the media, Kylie brings a wealth of communication and marketing skills to the team at iThink Property. She helped launch and develop the company’s rent roll several years ago and has organically grown the business with iThink Properties rental network now spanning Ipswich, greater Brisbane, Toowoomba and the Gold Coast.
KYLIE WALKER – DIRECTOR – BUSINESS DEVELOPMENT & MARKETING
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