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It's R-U-D-E to Pay Rent Late

Why do Residents consider it rude for a Manager to ask a Resident whose account is delinquent when to expect the rent to be paid?

Do Residents think that paying rent is an option under the Lease Agreement? For the past several months, I think I may be laboring under the assumption that Management has no right to even ask or remind a Resident that rent has become past due.

Chronic late payers need to be corrected in their thinking that paying rent late does not matter to the “Big Bad Management Company” who has all the money in the world. Even if they do have all the money in the world, that isn’t the point. Delinquent payers CAN cause a Management Company to delay payments to vendors, put off capital improvement projects, even scrap a plan to replace outdated appliances for the quarter when collecting rent is THE paramount goal for the onsite Office team.

Recently, spurred by this topic, I suggested some “creative” ways for Residents to scrape up the money to make it through another month. While directing concerned residents to the obvious sources: United Way agencies, township offices, Trustee Offices, churches, and other local charitable organizations, I was also wondering if there are other ways worthy of consideration.

 How about:

1.       Payday Loans (One manager I know has used this successfully at his property. I don’t know how that ultimately helps a resident in the long run, but it can keep a roof over one’s head for a month or two.)

2.       Get a second job! (Even I have done this when I needed to meet a financial obligation such as paying off a bill or wanting to go holiday shopping.)

3.       Borrow from a friend or relative (I’m surprised by the number of residents who claim they can couch surf at their friend or family member’s home but would rather spontaneously combust than ask for any kind of financial support/help.)

4.       Pawn something, anything (Maybe this is awkward to suggest? However, I’d rather pawn something I could possibly get back in the not-too-distant future than pay late fees and face eviction.)

5.       Sell stuff on Craigslist (I love hearing a resident say indignantly that no, they wouldn’t even consider such a thing. Hello? It’s just stuff. Sometimes buying too much stuff is what gets people into trouble. Not always, of course, but sometimes.)

If your resident has lost his job, then of course they should immediately seek assistance with applying for unemployment benefits, job training programs, and applying for food stamps. No matter what the statistics may say about how our country has recovered from the Great Recession, I can tell you that in some areas of the Midwest, where the industry is all service-related and not auto/factory/professionally geared, remnants of the recession affect the economy still and LAY OFFs are looming. This topic needs to be addressed before the holidays roll around again.

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This comment was minimized by the moderator on the site

I agree completely with the idea that the subject needs to be broached. I would be careful with payday loans, however, as those can cause a downward spiral, as they can't keep up. It should only be used if it is truly a temporary gap, and they can afford the (very high) interest, and not have to take out another loan to cover the prior one.

  Brent Williams
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Brent, I too, would be very careful to consider a payday loan or even to suggest it as the pitfalls are well known. However, as I said, one manager I know has offered this suggestion with success. What I see often are those that would never be able to catch up and would end in a worse predicament.

  Mindy Sharp
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At my previous community, whenever I had to hand out delinquency notices I also included a Community Resource sheet that listed all the (many) charities and Community Service Organizations that helped with rental assistance in our area, how to contact them, and what the agency would be looking for in order to verify and expedite their requests.

My philosophy was that it didn't matter how the money made it to the bank, only that it did.

I also would take time on my off-hours to sit down with some residents that I knew made enough money but were still struggling, and we went over their budgets line by line to figure out where they were hemorrhaging cash so that they could trim up their spending and (surprise!) make rent next month without struggling.

It's a fine line, but it was worth it.

  Jay Koster
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Great suggestions, Jay. What has amazed me are the number of residents who complain later that receiving the "unsolicited advice" was rude and offensive. I think when Managers offer information on where to go for help, it is not meant to be offensive; rather, it is offered as a helpful tip. Communication with residents is so important. Managers aren't credit counselors though and a lot of those in the position would not be qualified to offer debt reconciliation plans. However, when a resident indicates their interest in such, it could be a very valid and worthwhile endeavor to have them plan a budget. I used to do this onsite with many first time renters who wondered why they never had enough to pay their rent. There are also free apps and online programs available to track expenses residents could be using. Thanks for your thoughtful suggestions!

  Mindy Sharp
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Mindy and all. I would like to add this; Before a prospective resident starts signing documents, the lease needs to be explained paragraph by paragraph. Emphasis on paying on time to avoid late fees and to maintain their credit is very important. I often think that we are lax on being frank but polite as to the policies and what happens when residents pay late. Just a thought!

  Anne Sadovsky
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A couple of my clients still have many onsite lease signings. Makes wonder if we should create a very simple commons sense explanation that can be emailed. Of course, the challenge is getting our busy world to slow down and read it! Thought provoking, and I am going to address with a couple of clients!!!

  Anne Sadovsky
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Anne, as usual, you are right on point! While many residents are choosing to sign the lease online, I still believe an "introduction to your lease" appointment should be made, preferably before the day of move in. At this appointment, someone from the management team should hit the high points of the lease, making sure the new resident understands the obligations for both management and resident. The on-site team may feel this is "too time consuming", but my response is to ask how much time they spend with the resident when there is a problem.

  Vicki Sharp
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Mindy,
Good thoughts.
Our lease includes a list of local agencies that provide financial assistance for rent and utilities so they get it at lease signing. We review the highlights of each new lease with the resident - this time is WELL!!! spent because it eliminates SOOOO many problems down the road. We cannot expect them to live up to our policies if we don't teach them our expectations.
I would be amiss if I did not mention we no longer accept ANY excuses. We stopped playing God, deciding who's excuse was worthy of an extension. Each resident is treated the same - 3 days to pay to stay or vacate. Amazingly with this rule THEY PAY! We managers have taught them it's OK to call in and say they'll be late. It's only a moment of awkwardness during the phone call then relax.
And the one who thought it was rude...THEY have a problem not you! The were just lashing out in frustration because they know they should do these things. As Zig ZIglar used to say "They're kickin the cat."

  BRAD 20,000 GRAYSON
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Shift to weekly rents with a fee for the service. Easier to fins $220 this week than $800 plus late fees.
Uber. Pretax dollars arrive in their account at the end of each day. (i've been told)
We have a resident who drives 30 minutes to an area with more population (bars, theaters) and pulls in great part time income.
TaskRabbit. People post when they need help for anything (moving, assembling IKEA furniture, yardwork...) SOme are one time for a few hours, others are long term like pizza delivery.
Pizza Delivery. The drivers I talk to make $15++ per hour. Cash in hand today.

  BRAD 20,000 GRAYSON
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I'm a driver for Uber, and I make around $100-$150 a night, averaging 4-6 hours after work. The money can hit your account each night, but they charge a small fee (.50) to withdraw. I prefer to let it run until Monday when it deposits without fees.

The downside of pre-tax money is that you lose about 30% of it to taxes, plus you have to increase your gas budget, accelerate oil changes, etc. Those are all tax write-offs, sure. But in the immediate moment, it ends up costing more than many plan for. Then, come tax time, if they didn't save the 30% mentioned above, there's a big bill from the tax man.

  Jay Koster
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One more idea is to set the rent in the lease higher, then offer an "early pay" discount. For example, if the rent is $850, and the late fee is $50, then put the lease rate at $900, and tell them they get an "early bird" discount of $50 if they pay on or before the first day of the month.

Also, if you are offering lease concessions, make paying on time a part of that concession. Again, for example, if the lease concession is equal to $50 per month, then they pay back that month's concession if they pay late.

  Vicki Sharp
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Another great suggestion one of my properties suggests is to have them call their auto loan provider. Many times they will defer a payment for the resident.

  Stacy Shaw
This comment was minimized by the moderator on the site

That is an excellent suggestion, Stacy! I've also had residents do auto pay each pay period so half the amount of the rent is "set aside" so when the first rolls around, they have the money.

  Mindy Sharp
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Paying rent late is rude. It’s also irresponsible. And sometimes, many times, paying rent late is preventable; though also many times not easy. Paychecks just don’t stretch far enough for residents who are poorly equipped at managing their money, or for those who struggle financially when unexpected expenses put them in a bind. And let’s face it: more people than not are poor money managers even under the best of circumstances. Structured programs like rent from payroll provide an option for communities to reduce the burden of good money management for many residents. Setting up pay period direct deposits from employers enables residents to essentially remove themselves from managing rent money –- money that is sent to rent budgeting accounts we manage throughout the month before rent is due and then delivered on time to communities. “Rent on time / Peace of mind” isn’t just a tagline. It’s the polite – and efficient – process for timely rent from payroll – and the end of rudeness with late rent delivery.

  Ellen Calmas

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