Encourage Rent Payments from Renters

December 15, 2020

How to Get Renters to Pay Rent

Are you sliding into a dangerous financial situation with renters who avoid paying their rent? Before you hit the inevitable eviction wall, there are some tactics you could use to encourage rent payment from renters.

The current political mood is one that might make people feel hopeless about or justified in not meeting financial obligations. Capturing cash flow then and avoiding eviction processes, might require some pre-crisis intervention by you.

Current data with respect to renter assistance need, rising inflation, rising rent prices, and eviction laws, paints an unpleasant scene for landlords. Making rent payment easy and communicating to tenants that it is important can help. If you’re unable to encourage rent payment, 2022 could be filled with rent collection and evictions related costs.

Creating a Positive, Respectful Relationship

Establishing good relations with tenants often means being professional, being resourceful, respectful, and optimistic. A good attitude can go a long way to keeping your cash flow positive, but a few extra strategic tips don’t hurt either.

Rent as Debt: Falling Behind in Paying Rent

In 2002, despite NMHC’s multifamily rent tracker claiming a 7% rent default, the reality for most rental property owners was much higher rates of default, not to mention back rent due. That was a tough year. Unemployment rose 5% in June to 11% and we know some industries and cities were hit hard (Florida, Texas, Los Angeles, New York). The specter of default still exists. We’re not out of this pandemic era yet.

Eviction Filings

NPR.org reports that evictions are rising again, back to pre-pandemic levels (November 2021 most recent report). In their report, they show government assistance programs increased strongly this year. $2.6 billion in renter aid was issued in Sept. Now with Omicron virus fears, more shutdowns may occur and the economy may slow a little.

This may set the stage for evictions as moratoriums end and renters try to hold onto whatever income they have. The issue for landlords is the interruption in cash flow and rising financing costs. With inflation rising and government easing stimulus (bond purchases), the economy is a little at risk.

For landlords, and property managers, the threat is real. It’s vital to be strategic and effective in collecting rent.

And across the nation, more landlords are now free to file for evictions, and more will happen as city and state payment or eviction moratoriums can’t be extended much further. The tidal wave of evictions

This is happening as the Federal and state assistance programs face huge funding issues and further business bailouts are questioned. The Democrats and Republicans are increasingly locking horns as the November election nears.

Using Digital Media to Persuade Tenants

Encourage regular and on time rent payment is made a lot easier with digital payment tools. Messaging through a property management app, the web, or social media channels helps to build your message in a friendly way: paying your rent is easy and on time is the right thing to do.

Because when these obvious challenges appear, many tenants will convince themselves otherwise.

That’s all business and marketing is really, persuading customers to exchange money for your services. But in the Covid 19 era, tenants see the value you provide differently. That means your messaging has to change, and the medium of your message should change too.

Banging on doors and posting eviction notices might be persuasive to some landlords, but with social media, your actions are publicized, damaging your reputation, and setting up persistently adversarial relationships.

Your property management software can play a key role in creating better conversations. And for property management companies with huge numbers of renters to serve, a tenant friendly software platform can really help.

Changing Your Message

If the prevailing mood is toward “can’t pay or won’t pay” then why not show sympathy, but put the onus on renters to prove they’re being responsible, and make payment the most desirable action?

There are numerous styled templates you can use to demand rent from a renters. Whichever you might use to sent to your backrent owing renters, ensure it is firm but respectful. They must know there is consequences for not paying, especially when Covid related subsidies/payouts are available from the government(s).

This post is more about being proactive about collecting rent, rather than the process of demanding rent leading to eviction.

Young Renters Need Guidance

Younger renters want communications via digital media. They want reassurances, hope, support, and help from you to get government help for them. They want to know you’re on their side.

Using your property management platform’s communication tools, you can deliver a consistent message about your attitude, intent, and help them through a very difficult time. The end goal is to help them deal with this better and do what has to be done.

18 Ways to Encourage Renter Payments

By sharing information directly with tenants, you take control of the relationship and move them into a more positive frame of mind. The point of this is to make cooperation with you pay off for them.

If you haven’t already, set up and start to use your property software’s tenant communications channel. It’s your chance to take control and create an environment of cooperation and transparency.

use a cordial, calm voice in messages to communicate with tenants and contractors
encourage tenants to keep calm and look for solutions for their issues, including managing the money they have
remind tenants of your online rent payment app so they know there is nothing to stop them from paying
be open to partial payments which can be paid online via an Internet payment gateway
offer a time limited rent discount if they pay their rent by a specified date, and send a reminder about that due date
set up a time to speak with them personally via phone to discuss their situation
when asked for a concession/delay in rent payment, ask in turn for bank statements, credit card statements, car payments, investment accounts, utility bills, insurance bills etc.
use your property management tenant portal for informational use only (don’t use threats or demands in this channel because they will stop using it)
encourage tenants to express themselves and talk about their situation freely and check for untruthful statements made later if necessary
tell them how they can stop the eviction process if its started
create a thorough list of resources https://managecasa.com/articles/wave-of-evictions/ for them in the tenant portal or on your website
state the common problems so they know you understand their situation exactly, so they don’t waste time re-commenting on these baseline issues — you’re looking to move beyond being stuck to creating action
discuss solutions that could work for them such as calling government agencies, asking family for money, moving in with a friend, or forwarding half their aid checks
have names, emails, web urls, facebook pages and phone numbers of government leaders responsible for rental property laws and encourage tenants to ask them directly for funding
post articles and news stories about landlord points of view and needs
post and share articles on what happens when landlords can’t pay their mortgage – let them see the future and present just a little fear into the matter of not paying rent
post articles on how to raise money from relatives and friends
post articles on moving to other cities away from high cost cities (for those who will never pay their back rent due)

Keeping the Relationship Alive

There’s a lot of stories out there about rent default and refusals to meet lease agreements, yet precious few about happy endings. Keep happy endings in your mind and build your rent collection strategy to them.

Most of your tenants will be staying with you so you’ll want to avoid burning the bridge with them. For the rest, it’s about being strategic so they’re willing to pay you.

See more on tenant retention, getting tenants to sign lease, tenant surveys, and keeping good tenants.