As the cost of living rises, rental arrears are becoming a larger issue for property managers. But one principal has found the secret to keeping his arrears rate at zero.
Award-winning BDM and coach Deniz Yusuf told Residential Property Manager that arrears had become a more noticeable problem lately.
“People are cutting back in this economy. We’re seeing people buying pushbikes because petrol is too expensive, we’re seeing people giving up smoking.
“And we’re not sheltered from this in real estate,” he said.
Even with reduced interest rates, the cost of living is squeezing landlords, according to Mr Yusuf.
“Landlords are ringing up property managers and asking for cuts to fees, while rental arrears are becoming more and more of a problem," he explained.
“It’s getting to the stage where the landlord needs the rent to pay the mortgage, so they’re on the phone to the property manager screaming, while the tenant is screaming for maintenance and unable to pay the rent.
“It all comes down to picking a good tenant in the first place, and a good agent will always pick a good tenant. They understand that it costs more in the long run if you put in a tenant who will fall into arrears and cause high amounts of wear and tear to a property.”
Cameron Ewers, principal at Pure Leasing in Western Australia is proud to have an arrears rate of zero per cent.
“You really need to have a proactive approach to rental arrears and set down the ground rules from day one,” Mr Ewers said.
“The tenant needs to know that there is a zero tolerance on rent arrears, and you need to be firm on that. Firm, but still fair.
“A lot of tenants have come from other property managers who were complacent and they expect the same thing to happen again. They might expect a phone call on the third day of arrears asking for rent, and then a phone call each week afterwards asking for it.
“You need to come down like a tonne of bricks on people like that because they will continue to walk all over you and treat your business like a joke.”
Taking a hardline approach to unruly tenants might be out of some property managers comfort zones, but Mr Ewers swears that his method works.
“We issue seven-day termination notices and take matters to court on the eighth day if they fall into arrears. And in eight years, I’ve only had to go to court once,” he said.