How to easily collect on tenants Debt Management
Collecting payment is one of the toughest parts of any business. I want to tell you how I handle Debt Management, what has worked, where I am today and what I recommend for this often complicated task.
Somebody owes you money. They were living in one of your units or one of your houses. They left without paying and left a lot of damage to your place. It is going to cost you a lot of money to get the place back up and going again.
But getting the place back up and going again is our first course of action. In Ohio, we call this reclaiming the property. After the property has been reclaimed, we work to recover our money. At this time we don’t run to evictions court.
Debt Management and Collection Agency
My recommendation is collection agencies. Hire one. The time and pain of the legal process is cut down this way. Collections agents are willing to work to get your money. I like going with local agencies rather than national agencies. I only hire one agent for one particular debt. You can’t spread it around or hire ten different agencies for one debt.
We pull the information together and have pictures of the damage for them. They now have proof.
Once you turn it over to a collection agency you will need to know that they will not want to go after it the first week. They want to wait 30 days to have the person get a residence somewhere. Once they’ve moved out of your place they are in limbo and tough to find.
If the collections agency waits 30 days, they have a better shot at finding them in their newly established residence.
After the 30 day mark, the Debt Management agency will be aggressive-very aggressive. Because every day this collection gets older, it becomes harder to collect.
I learned this one the hard way. When I first started doing this, I had a renter move out. I made the rookie mistake of putting the collections on the back burner. I was going to decide a year later whether or not to go after them. When I made my decision, it was too late. No collections agency would go after something that old. I put it on the back burner and I got burned!
Collections shops want something that’s hot and active. They can be aggressive on that. It doesn’t matter whether the renter skipped in the middle of the night or was evicted. If it’s old news, the Debt Management agents don’t want to touch it.
Often somebody who lives locally leaves your property and heads out of state to live with family in Kentucky. Maybe a local agency can’t chase in that state. But you’ll have agreements with whoever is collecting.
A lot of times its attorneys who are collecting and some of them will want 50 percent; some of them will want 30 percent. There’s always some snag. I really don’t care I just want somebody else to do it. When they collect, we pay.
The bottom line here is you get your money. This is business and it’s about the bottom line.
E. Alan Cowgill is the owner of Colby Properties, LLC. and President of Integrity Home Buyers, Inc. Since 1995, Alan has bought and sold hundreds of single family and/or small multi-family investment properties in Springfield, Ohio. Alan uses Private Lenders, not banks, to fund his real estate purchases. By doing this, he has created his own private bank of ,000,000 in funds. Alan looks for situations where the seller, the lender, and the eventual homeowner can all “Win”. He is not a Realtor, but a Private Investor, author, consultant and national speaker. He has been asked to speak on the topics of ‘Investing for the Beginning Investor.’ and ‘Finding Private Lenders.’ His home study system, ‘Private Lending Made Easy’, shows new and seasoned real estate investors how to find private lenders for their own real estate business.
His website is http://www.supercoolsystems.com
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