|
Dec 30
2011
|
What Incentives Do You Use to Collect Your Rent on Time?
Posted by: Nate Thomas on Dec 30, 2011 10:42 |
|
You know I have read old posts about rent collections and here is one which it may not work for every community, but may work for some.
One property placed it in the contract with the personnel that if they paid their rent on time on a "by date" for 12 consecative months they would only pay a 1/2 months rent for that following month past that.
The manager ensured that each tenant on a monthly basis received a thank you for their timely rent payment and would have on each notification their status as it assisted them all to ensure that if there was a mistake it was caught right away.
This was an idea which worked for that property an to my understanding it has been working for the past two years. The on time rent collections were higher than they had ever been. There was a higher retention rate of their tenants, but I might add it was not on the discount on rent alone as they had a very aggresive maintenance repair program as well as creating a more family oriented community with social gatherings and townhall meetings that focused on community improvements.
They did not want their name shared, but I thought this was worth throwing out there. I know they have a waiting list of personnel wanting to get into their community, so they must be doing something right.
Set as favorite
Hits: 659
Comments (13)
I really like that, and it's similar to a new program by I think AllState, where your deductible goes down to zero after so many months of no accidents.
-
- +0
-
-
I thought it was a great idea until I did the math. We would be giving away about $20,000. It would have to be a gamble, if only a few of your residents consistently pay on time then it could be worth it.
California law allows for (maximum) 10% of the rental amount to be charged as late fee. We charge 10%. Rather than write off that 20k as an incentive to do what they should be doing anyway, not having to pay almost $100 late fee is a better incentive. A great spin on it is well you saved yourself $1200 this year!
When I think a resident is falling into that habit of paying late, I remind them that they're going to be paying about $100 more a month in late fees - it's a difficult hole to dig out of as we don't waive fees, don't allow them to be carried to the next month and if a partial rent payment is made we first deduct the late fee then apply the rest to the rent.
The bonus to the resident is I do projects such as upgrades that consist of installing those uber cool high spout faucets, modern drawer handles and other hardware accessories in the kitchens and bathrooms. Much better use of time and funds than chasing them down trying to get them to pay rent on time. Putting the $ toward the fun upgrades creates a great visual impact that increases the value of the apartment and the residents love this stuff.
Lastly, paying rent on time is part of the initial lease signing conversation. Review salient points (parking, disturbance etc) and the last item on the list is ...and Please, pay your rent on time.
Now you've got me laughing at myself and my attitude toward the give the $ away tactics. I rarely do move in specials. It seems that those who ask about it don't know what they're looking for rather they've just been trained to ask about specials. I tell them I can do that if they want, it consists of raising the rent above what we would normally value the apartment, determining the spread over a 12 or 18 month month period then doing the calculations to make it appear as if they're getting a deal. The reply is always: so THAT'S how they do it.
California law allows for (maximum) 10% of the rental amount to be charged as late fee. We charge 10%. Rather than write off that 20k as an incentive to do what they should be doing anyway, not having to pay almost $100 late fee is a better incentive. A great spin on it is well you saved yourself $1200 this year!
When I think a resident is falling into that habit of paying late, I remind them that they're going to be paying about $100 more a month in late fees - it's a difficult hole to dig out of as we don't waive fees, don't allow them to be carried to the next month and if a partial rent payment is made we first deduct the late fee then apply the rest to the rent.
The bonus to the resident is I do projects such as upgrades that consist of installing those uber cool high spout faucets, modern drawer handles and other hardware accessories in the kitchens and bathrooms. Much better use of time and funds than chasing them down trying to get them to pay rent on time. Putting the $ toward the fun upgrades creates a great visual impact that increases the value of the apartment and the residents love this stuff.
Lastly, paying rent on time is part of the initial lease signing conversation. Review salient points (parking, disturbance etc) and the last item on the list is ...and Please, pay your rent on time.
Now you've got me laughing at myself and my attitude toward the give the $ away tactics. I rarely do move in specials. It seems that those who ask about it don't know what they're looking for rather they've just been trained to ask about specials. I tell them I can do that if they want, it consists of raising the rent above what we would normally value the apartment, determining the spread over a 12 or 18 month month period then doing the calculations to make it appear as if they're getting a deal. The reply is always: so THAT'S how they do it.
-
- +2
-
-
Janet, you are speaking to my true love, apartment upgrades. I absolutely love having resident incentives also subsidize improvements to an apartment.
Great comment!
Great comment!
-
- +0
-
-
I am sure if I were to take the time and look real deep into it, the property is making the cost up somewhere as they are not losing anything and Janet, you may be correct in it may be about how they give the illusion of a save when it may not be for the customer. All, I know is that their occupancy is off the chart and like I said this was not the only thing that I seen as they had an aggressive maintenance and repair program as well as creating a more family oriented community with social gatherings and townhall meetings that focused on community improvements.
I think the community improvements included the upgrades not only to the outside, but to the units as well. I will go back to them and try to get more information. Seems though that this property manager is a rock star with her management company and the owners though. I am sure if the dollars were not right they would not be singing her praise.
I think the community improvements included the upgrades not only to the outside, but to the units as well. I will go back to them and try to get more information. Seems though that this property manager is a rock star with her management company and the owners though. I am sure if the dollars were not right they would not be singing her praise.
-
- +0
-
-
Never said she was doing anything wrong, Nate, or that she is anything less than a rock star. I'm always thrilled to hear success stories and believe we all take something away from them. My line of thinking just happens to be: with a mortgage that needs to be paid, re-fi's that depend upon appraisal value, salaries, regular maintenance, emergencies, insurance, advertising, etc etc etc it gets eaten away very quickly.
With collections already where they should be, to put that 20k into a tangible form from which both sides benefit is the best use - for us. I just happen to agree with the current trend that is moving toward not giving it all away.
With collections already where they should be, to put that 20k into a tangible form from which both sides benefit is the best use - for us. I just happen to agree with the current trend that is moving toward not giving it all away.
-
- +1
-
-
These collection incentives help during bad economic times and on properties with poor collections.
A popular incentive I've seen is the monthly giveaway contest with something that is current and hot. Back in the 90's, we had a drawing of the prompt payers for a DVD player (when they were new). Last month, I saw a property put all the names of early payers for that month, in a hat, and pull the winning name of an XBox. If I heard my landlord was giving away an IPad, I'd run a little faster to pay my rent. My landlord gives a $25 Target card. To offset costs, you can either purchase in bulk or get it donated or buy prizes off EBay.
A popular incentive I've seen is the monthly giveaway contest with something that is current and hot. Back in the 90's, we had a drawing of the prompt payers for a DVD player (when they were new). Last month, I saw a property put all the names of early payers for that month, in a hat, and pull the winning name of an XBox. If I heard my landlord was giving away an IPad, I'd run a little faster to pay my rent. My landlord gives a $25 Target card. To offset costs, you can either purchase in bulk or get it donated or buy prizes off EBay.
-
- +0
-
-
Hey Janet,
Never took it in a negative light your comments. You see it is always good to have these discussions on what we see or think and get feedback. There maybe other ideas and it helps others that may not comment to the different ideas, but it gets their minds to churning. There are quite a few managers out there struggling for new ideas to bring up their occupancy. Maybe something we bring up on here will assist them. To me the more we pool our minds to things the more we succeed as professionals and from that hopefully there are tenants who would not rather be anywhere eles other than the property that they are at! So, when I comment back it is to let people know that I have given thought, throw in something else I may have missed, and then there are times what I thought I was conveying was clear to me, but I did not get my meaning over to the audience. I always love sharing ideas and thoughts on different subjects as this is how I grow. You know the old saying, "Never too old to learn".
Never took it in a negative light your comments. You see it is always good to have these discussions on what we see or think and get feedback. There maybe other ideas and it helps others that may not comment to the different ideas, but it gets their minds to churning. There are quite a few managers out there struggling for new ideas to bring up their occupancy. Maybe something we bring up on here will assist them. To me the more we pool our minds to things the more we succeed as professionals and from that hopefully there are tenants who would not rather be anywhere eles other than the property that they are at! So, when I comment back it is to let people know that I have given thought, throw in something else I may have missed, and then there are times what I thought I was conveying was clear to me, but I did not get my meaning over to the audience. I always love sharing ideas and thoughts on different subjects as this is how I grow. You know the old saying, "Never too old to learn".
-
- +0
-
-
Hey Steven,
I like your deal even better! You see these ideas are flowing and I bet there is some manager out there who is struggling with rent collection or even how to get the occupancy rates higher and a little of this and a little of that idea may make the difference. Thank you for sharing as well!
I like your deal even better! You see these ideas are flowing and I bet there is some manager out there who is struggling with rent collection or even how to get the occupancy rates higher and a little of this and a little of that idea may make the difference. Thank you for sharing as well!
-
- +0
-
-
Nate... I'm only commenting about what works for us. Happy New Year 
-
- +0
-
-
I do a monthly rent deduction drawing from all the residents who paid on or before the first of the month. And that was okay. But even with special drawings for special prizes, etc., I finally told the Owner that the only way to get the rent earlier was to change the "Grace Period." It used to be a full 5-Day Grace Period and 1/3 of the residents paid on the 5th. It is now a 3-Day Grace Period and this has forced residents to pay earlier or succumb to the Late Fee of $75 followed by $10 Daily Late Fees.
I try not to focus on the "punishment" part of on-time pay by offering a lot of other fun activities throughout each month. I know I don't like Late Fees, but I also know Residents have many options to pay, including by credit card, if an emergency arises so there should be no excuses to pay late.
I believe in encouraging residents with other things, too, like offering Special Parking places for 5 year, 10 year, etc. Residents, installing garage door openers as well (my personal favorite) and apartment upgrades whenever possible.
I try not to focus on the "punishment" part of on-time pay by offering a lot of other fun activities throughout each month. I know I don't like Late Fees, but I also know Residents have many options to pay, including by credit card, if an emergency arises so there should be no excuses to pay late.
I believe in encouraging residents with other things, too, like offering Special Parking places for 5 year, 10 year, etc. Residents, installing garage door openers as well (my personal favorite) and apartment upgrades whenever possible.
-
- +0
-
-
Please don't take this as a negative or be offended when I state that I feel that you really need a picture where you are smiling. You look kind of angry or unhappy. I think it's so important to post pictures that make us look approachable and happy.
I couldn't bare it anymore and had to mention this.
I couldn't bare it anymore and had to mention this.
-
- +0
-
-
Hello Bunny,
Not offended at all. Not angry, not unhappy, just the way I look. Now understand that this is the old 25 years in the military guy's face you are looking at. Here is a smile! You know if I smile you might say hey, do not smile because you need some serious dental work. On the serious side of things it is my face because I do not go around smiling all the time. But I have fun and most people are always amazed at high laid back I can be, but the otherside is also true when I get focused on something. When I smile though people know it is for real.
But, I like it when people say what is on their mind! One day I may change my photo if I find one that represents me with a real smile
Not offended at all. Not angry, not unhappy, just the way I look. Now understand that this is the old 25 years in the military guy's face you are looking at. Here is a smile
! You know if I smile you might say hey, do not smile because you need some serious dental work. On the serious side of things it is my face because I do not go around smiling all the time. But I have fun and most people are always amazed at high laid back I can be, but the otherside is also true when I get focused on something. When I smile though people know it is for real. But, I like it when people say what is on their mind! One day I may change my photo if I find one that represents me with a real smile
-
- +1
-
-
I have a lot of student rentals, I offer a discount if they will pay the rent in advance by the term. This is how the dorms charge the student so they are use to it. Many of the students get their financial aid in a lump sum. I do not require parental guarentee when doing this.
I have also asked tenants for post dated checks. Most of the time the goal is to save time.
I have also asked tenants for post dated checks. Most of the time the goal is to save time.
-
- +0
-
-
Subscribe to this comment's feed
What Do You Think?
