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Following up rent arrears – the right way

14 October 2015 | 10 minute read
Jess Mazzocato

Do you have processes to ensure that your property managers follow up on rent arrears in the right way? Here’s what happened when we changed this agency’s approach.

As a property manager, are you more shocked if you have rent arrears or not?

Like most of you, at Real Estate Precinct we have systems and procedures that we follow every day, including processes for following up on rent arrears.

Most property managers I speak to in other businesses often follow up rent arrears every morning.

But I'm going to ask you again: are you more shocked when you have rent arrears, or when you don’t? And how do you follow up with tenants who are in arrears?

What's your plan of attack?

I was recently asked by a sale-based principal to help streamline their agency’s property management department. (Don’t worry – I have the principal’s permission to share this.)

On the first day, my plan was to sit back and watch how the department ran. So I observed as the senior property manager gave each of the property managers their arrears list. Then all the girls got on the phone at the same time to follow up with their tenants. So far, so good.

But then I heard their conversations on the phone.

The property managers approached following up with their tenants by "attacking them with fear". The conversation went a little like this: "this is NAME from AGENCY NAME, why is your rent in arrears?"

I nearly fell off my chair when I heard this.

Have some empathy!

After the first calls were done, I asked them all to stop.

Then I asked the property managers how they react when someone drops off their keys after vacating, and utters the classic line: "It's cleaner now than when I moved in."

Rolling their eyes, they all responded: "Oh god, you know it's going to be a bad vacate inspection."

We continued to discuss how they feel when a tenant walks in and verbally attacks them by basically saying: "You did a terrible job when I first moved in, but don't worry, I fixed your mistake now." They all agreed that this made them become defensive.

I then explained that when they made calls like that to their tenants in arrears, it was likely to make the tenant defensive and "offside", rather than cooperative. Everyone agreed that the same logic that applied to them and how they felt, would surely apply to their tenants too.

So when they made their next calls, I asked the property managers to all follow this script: “Hello TENANT'S NAME, this is NAME from AGENCY NAME. How are you are today? I’m phoning you today because my senior property manager, NAME, has just advised me your rent is not in our account and is now X days behind. Is everything OK?"

Instead of attacking the tenants, the property managers were now communicating that they were simply concerned about them. And the difference could be felt immediately, as it completely changed the tenants' mannerisms, responses, and actions.

The result

The experience I've shared happened three weeks ago. I've been advised that arrears at this agency are now much lower. We'll continue to monitor and track this to ensure the whole team meet their KPIs for rental arrears. But a difference has already been made. And all it took was a little empathy.

Your say

How do you approach rental arrears in your business? What does and doesn't work? I'd love to hear how you effectively manage your rental arrears, so let me know in the comments below.

Do you have an industry update?


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