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The foolproof guide to keeping rental arrears under 2pc

By Athena Law
15 April 2015 | 9 minute read
Athena Law

A lot of property managers tend to pop rental arrears into the ‘too hard’ basket, but with a proactive approach you can get your arrears right down  and keep them down!

We all know that rent paid on time equals happy owners. However, if you’ve become caught up in a reactive cycle of chasing arrears, you probably haven’t had the chance to address the actual issues causing the late payments. By applying just a few different techniques you can change your approach to arrears handling, and more importantly, see a nice big reduction!


Dedicate an hour each and every morning to arrears. For this time, you are no longer a ‘property manager’, you are now a ‘credit controller’  a fearless crusader seeking truth, justice and FUNDS! 


Just how bad are your arrears? Be aware, and be realistic. At a previous agency I inherited a portfolio running at 18 per cent (arrears over three days) and it took three months to get it under two per cent, and keep it that way. Even when you reach the Holy Grail, never relax; persistence and consistency are what it takes. 


You would be amazed at how many agencies don’t start actioning arrears until four days overdue, or worse – seven days. Start printing your reports from one day overdue. Start texting tenants with a polite reminder at one day. Yes, one day! 


This is where things really start to change. Constantly following up the same tenants week after week after week is like putting a Band-Aid on a broken leg. By doing some detective work to find out the cause of the late payments, and working with the tenants to seek solutions, you will actually fix the problem! Your goal is to negotiate a long-term solution and to never see this same tenant pop back up on your report. 


Rules differ from state to state, but if you can breach the tenants on day eight, then do so, don’t wait until day 10 or 12. You have a responsibility to the owner to be proactive. 


We have a mantra in our office when processing tenancy applications: 'We don’t want to inherit anyone else’s problems'. The biggest red flags for us are, of course, arrears. It pays to be careful. The previous agent may have said on the reference that the tenants always paid rent ‘on time’, but a close look at the ledger may show a pattern of continual late payments. That agency may have considered arrears less than seven days to be ‘on time’ – which is certainly not our definition! 

Yes, this process does take time and dedication, but imagine how pleased your boss will be when you show them a single page arrears report! Good luck, fearless credit crusaders! 

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