Landlords Get Creative to Maximize Rent Collections
May 26, 2020
Many landlords are finding success in collecting rental payments, even as the COVID-19 pandemic has sent unemployment skyrocketing. Some are offering flexible payback terms, gift cards, or other incentives to try to get tenants to pay rent and avoid forbearance if they’re able to.
Ellie Perlman’s company Blue Lake Capital LLC has 2,000 rental units across the country, and she recently shared with Forbes.com how her company has been able to collect more than 96% of rents during April and May. Meanwhile, the portion of property owners successfully collecting rent nationwide hovers around 69%.
Perlman said that during March they offered early-bird discounts to those who paid rent. They discounted rent by $50 if residents paid for April rent by March 30 and $100 discount for paying for May during March. About 20% of their tenants took advantage of the discount.
Blue Lake Capital LLC also offered tenants flexible payment plans. Perlman shared one scenario as an example: If a resident paid $600 of their $1,000 rent and had four months left on the lease, then Blue Lake Capital would increase the tenant’s rent by $100 per month for the remaining four months of their lease.
They also allowed residents who became unemployed during the pandemic to use their security deposits to pay rents. But Perlman said that carries some risks. “The challenge is that you also can’t expose yourself to an unnecessary risk of releasing the security deposit,” she wrote. “To mitigate that risk, allow residents to sign up for security deposit insurance, which basically replaces the one-time security deposit with monthly payments of $5 to $10.”
In some cases, they also tried to incentivize renters by sending Walmart gift cards to every tenant who had been impacted by the coronavirus. “Not only did we feel that was our way to give back, but we were also hoping that our residents would feel more inclined to pay rents when they became in a better position to do so,” she wrote. “It worked—kindness still goes a long way.”
“Seven Proven Tactics to Maximize Rent Collections During a Crisis,” Forbes.com (May 18, 2020)
Updated: July 02, 2020