Topic: 80% delinquency by the 15th of the Month!!!!!

I have recently been promoted to Area Manager and one of the properties I oversee has 80% delinquency!

OMG!!!

The new manager and I have developed some really strong letters, made phone calls, sent e-mails, threatened eviction, credit reporting and nothing!!!!

We didn't file this month because it would have been all except about 4 residents out of 32 units and it is very expensive to file.

They only have to pay 5% late fee! That's not motivation.

Need advice here!

Ugh, Sandy that is horrible!

You can't file on everyone, but if you file on some but not others, you could be in violation of fair housing law.

We do it this way:

The first late payment, they get a late fee of $75 and a non-compliance notice.
The second late payment, they get a $125 late fee and a non-compliance notice.
The third late payment, they get a fee of $125 plus 5% of their rent.
Fourth late payment, they get a "For Cause" termination notice, which says they must comply with the rental agreement within 2 weeks or vacate within 30 days, and that if the same violation occurs within 6 months, they will get a ten day repeat violation notice with no option to stay.

If the resident complies for six months, but then falls back into old habits, we do not renew their lease, and give them a notice of termination to move out by the last day of their lease.

If legal, and I'm not sure if it would be, I would count the late payments of each resident, and the ones that have had the most lates in a year, or the most consecutive lates would be the first to go, then on down the list.

I say file!

Your residents have learned that it's ok to pay late, and that has been confirmed because once again they are late and there is very little penalty.

Give an inch and they'll take a mile.

File and charge the fees back to the resident. Get ready for a firestorm when they receive the notices, but also get ready to start receiving rent on-time :)

Good luck!
Matt

We cannot charge more than 5% late fee in North Carolina. That is NOOOOO motivation to pay on time.

Issue your pay or quit notices to all those with delinquent accounts. Offer payment plans to those who actually come in and will pay on time to catch up; file for eviction if they don't honor their written PP agreement. I am not a fan of the PP approach but with 80% of the occupancy affected ... I am not sure your Owner would agree to doing anything else.

If left up to me alone, I'd file and get rid of the deadbeats. Then I would get new residents who can pay on time.

I also work in North Carolina and understand that 5% late fee madness. Facing a similar situation when I started at this community, it took some patience, organization, and time to get the property back on track. The aggressive tactic was the only thing that seemed to work here. We used constant communication with residents via phone, knocking on the door, and letters to let them know we were here. It ensures they are constantly reminded about the rent. Make sure to get promise to pay dates and mark your calendar to follow up if they don't follow through. Eventually they will either get caught up or move.

I also found that scheduling a "sit down" meeting with residents has helped many get back on track. Find out how much they can pay and when...If they aren't able to keep their end of the agreement you have the right to file without breaking any Fair Housing Laws because they didn't "pay as agreed" which is what we use to file evictions at my property. Just be sure to document and keep a log of conversations, dates, what was discussed, etc. The residents that avoid you or you don't hear from...I'd go ahead and file the eviction. More than likely they won't be in court and you can successfully end their tenancy.

When I arrived here in 2010 we were over 30% delinquent. We have closed out below 5% consistently for the past 3 years.

Side note: You may want to make adjustments to your qualifying criteria to make sure any new residents are well qualified and can afford to pay the rent so you aren't repeating the cycle.

If it's in the budget, perhaps you should offer incentives for on time rent payments. What I found is that you can't just threaten the resident, you have to follow through on your threats. With that being said you have to be prepared for your occupancy to take a hit and going forward I would enforce stricter guidelines during the qualification process.