How to Keep Rental Arrears Low
Missed payments can cause a headache for all parties involved with a rental property. Money flowing smoothly from the tenant to the property manager and the property owner is key.
However, a tenant’s circumstances can change dramatically in a short amount of time and sometimes they aren’t able to meet their rental payment deadline. This is when rental arrears starts and it can lead to unsatisfied parties, which means trouble for your business.
It’s not a simple task, but it can be easier
Unfortunately, late rental payments are not uncommon but it’s up to property managers to decide how to deal with them. There are strategies that property managers can use to deal with rental arrears, but these can sometimes be hard to implement.
We spoke with Jaclyn Lazarou, Business Development Manager at Doug Disher Real Estate, to gain a better understanding.
Lazarou says her office’s rental arrears sits comfortably below two per cent most days of the week, and her team’s strategy revolves around proactive and considerate communication.
“Managing the arrears is one of the hardest tasks we have to do as a property manager because our clients’ lives can change in the blink of an eye,” she says. “We believe showing empathy helps resolve the issues before they can get out of hand.”
It’s all about communication
To further show the success of Lazarou’s office, over 98 per cent of their property owners are receiving regular rental income. Not only is this a statistic that Lazarou is proud of, but she says it proves the credibility of the strategies that her team has implemented.
“From the beginning of a tenancy, we set up an expectation so they understand how we need to look after them and how they can come to us,” says Lazarou.
“If we know what’s going on, we can go to the property owner and explain to them that this tenant has fallen on difficult times, and we should look at how we can help them through that.”
For Lazarou, it’s not about simply satisfying the property owner –, there are more factors at play than just the transfer of money. She says the outdated technique of demanding rent without flexibility is no longer effective.
“It’s all about really awesome communication, staying in good contact and using positive language to make tenants feel comfortable to come to you with whatever issue that’s on the table.”
Create the right processes and procedures to minimise risk
As a property manager, even if you are doing everything you can to support a tenant, there is still a chance of running into some issues.
“You don’t know what is happening in someone’s life for them to change from being the perfect tenant,” says Lazarou. “It could be a number of things that property managers have no control over.”
These problems can cause a delay in payment or even result in a tenant leaving the property, depending on the severity. Whatever the case may be, having the right processes and procedures in place can help reduce the risk of losing business.
“The secret is service and taking the time to do the job,” she says.
“We have the capacity to support our tenants individually and this enables us to look after our property owners retrospectively.
“Setting up a tenancy with respect going both ways enables you to be able to listen to issues or raise any issues with open and clear dialogue. If everything is spoken about and then followed up with an email in written correspondence, there is no confusion as to what needs to happen.”
Additionally, the changing nature of property management legislation can be hard to navigate and even Lazarou’s office, which has decades of experience, takes advantage of the services that the REIQ has on offer.
Positive communication yields positive results
Strong relationships and positive communication can have a positive impact on more than just your rental arrears. Lazarou says it can also help retain tenants for longer.
“We want tenants to stay in our properties for as long as possible – that’s good business for our landlords,” she says.
There is even a possibility of new business with tenants who make the transition to property ownership, which is a situation that Lazarou recently experienced.
“I asked a landlord why she asked me to come along to this property and she said ‘I used to rent through Doug Disher Real Estate when I was renting… I know how well you treated me and I want my tenants treated the same way’.”