As a landlord, collecting unpaid balances from residents after they move out can be a tricky process. It’s important to understand that not all residents will leave their rental property in good standing, and as a result, you may need to pursue post-move-out collections. However, it’s easy to make mistakes that can make it harder for you to collect the unpaid balances. In this blog, we’ll discuss the top mistakes landlords make in post-move-out collections and how to avoid them.
- One of the biggest mistakes landlords make is failing to conduct a move-out inspection. Without a move-out inspection, you won’t have a clear understanding of the condition of the property and what repairs or cleaning are necessary. The move-out inspection also helps determine what damages and repairs are the resident’s responsibility.
- Once you’ve conducted a move-out inspection, it’s essential to provide your resident with a detailed statement of charges. Failing to provide a detailed statement of charges can lead to confusion and disputes between you and the resident. Ensure to include all damages, cleaning expenses, and unpaid rent on the statement of charges.
- Another common mistake is failing to send the statement of charges in a timely manner. Most states have laws that require landlords to send the statement of charges within a specific timeframe after the resident moves out. Failing to send the statement of charges within the timeframe specified by your state’s laws can result in losing the right to collect unpaid balances.
- Another common mistake landlords make is not knowing their resident’s contact information. It can be difficult to collect unpaid balances if you don’t have a way to contact your resident after they move out. Make sure to get your resident’s forwarding address and phone number when they move out so that you can contact them if needed.
- Finally, one of the biggest mistakes landlords make in post-move-out collections is not reporting rent payments to credit bureaus like TransUnion, Equifax and Experian. While residents are still renting your properties, you may report their payments to the credit bureaus to incentivize timely payments by giving them a chance to boost their credit scores. It also holds delinquent payers accountable to avoid late payments from appearing on their credit reports. Hence, even after they move-out, you can hold them accountable for any unpaid rent by reporting to the credit bureaus. By enrolling your properties to Sperlonga’s Rent Payment Reporting service, you have an option to report tenants after they move out for up to 6 years and 9 months from original delinquency date. This has been confirmed effective by Sperlonga’s clients.
Trio Residential, a property management company, was able to collect more unpaid balances and improve their collections process by utilizing Sperlonga’s Rent Payment Reporting solution. After a few months of using the service, a delinquent tenant who vacated their property without settling their outstanding balances in full reached out to submit their full payment. Trio Residential believes that this payment would not have been made if it were not for Sperlonga’s Rent Payment Reporting solution. By using the service, Trio Residential was able to incentivize timely payments from their tenants and hold delinquent payers accountable, resulting in better post-move-out collections.
“Our team appreciates the credit reporting solution that Sperlonga provides. Through their credit reporting, our residents are rewarded for on-time payments while late payers experience the consequences. We had a resident who moved out with a large balance and was not communicating with our team; we ended up having to submit the account to collections. After a few months, the resident reached out to our team to submit payment in full around the same time they disputed the account on their credit report. We are certain that the resident would not have paid us had it not been for Sperlonga reporting the account.” -Amber Duke, Senior Portfolio Performance Specialist, Trio Residential
In conclusion, post-move-out collections can be a challenging process for landlords. However, by avoiding these usual mistakes, you can make the process smoother and more efficient. Conduct a move-out inspection, provide a detailed statement of charges, send the statement of charges in a timely manner, know your resident’s contact information, and utilize a rent payment reporting service to improve your collections process.