It’s simple economics when rents go up, rent payment issues go up, because it becomes harder for people to afford leasing an apartment.
By Ellen Calmas
For for most typical renters, working class families, recent college graduates, and young professionals climbing the career ladder, qualifying for a new apartment lease just gets tougher as monthly rents increase.
And asking applicants for more money in upfront in security deposits only shows they can come up with that cash, while likely setting them up to be cash-strapped at some point in the lease.
That is why residents often pay rent late or fall behind completely, resulting in unwanted action by community staff who are just doing their jobs in enforcing a lease.
Rent payment issues send property managers to court
While owners and managers look diligently at opportunities to renew residents and keep them at their properties longer, payment issues are typically the straw that sends hard working assistant community managers to court to earn their stripes in fighting for what is due from delinquent residents.
In the high flying rent market of San Francisco, for example, the March 2016 Rent Board Annual Eviction Report showed some 30 percent of evictions in the past year were due to habitual late payment, non-payment or breech of rental agreement.
According to published articles, the next most common way to end up in eviction court is when there is evidence of a violent or antisocial criminal act or a drug-related offense that merits a felony conviction, or less serious though equally problematic issues related to specific lease violations.
Huge amounts of time in court to correct residents’ wrongs cannot possibly be a favorite part of the job, especially when a typical community of 300 units can have as many as five to eight residents who need to be brought to court in a month, or 60 to 86 residents in court in a year. At thousands of dollars per incident, costs add up quickly, and take their toll on community staff who also have a full load of non-court related responsibilities to attend to.
Industry statistics on payment performance and evictions are easier to come by than those on employee retention. Also hard to find are exit interviews with community management burned out by the negative aspects of the job. But it doesn’t take a statistician to know that people generally dislike conflict and are not emotionally equipped to manage it on a continual basis.
How to solve rent payment issue problems
What is a community to do to maintain good payment performance and, in turn, resident retention as well as that of community staff?
That is where innovative new programs in rent delivery have been proven effective, especially at B and C communities in markets where credit and rising rents may be in conflict.
One such program focuses on rent from payroll from NPS Rent Assurance. According to an analysis the company completed of 6,597 conditionally approved applicants, skip and eviction rates went down a whopping 77 percent — 9.37 percent to a 2.12 percent — when rent from payroll is utilized by residents who present with higher payment risk based on credit. For instance, that is 30 to 35 percent of all rental prospects conditionally approved.
Based on industry estimates of $4,000 in court costs, staff time, lost revenue, make-ready and marketing costs for a vacant unit to achieve new occupancy, the cost of unexpected move-outs drops by more than $250,000 for every 1,000 conditionally approved move-ins on a rent from payroll program.
As a result of significantly improved payment performance, residents on rent from payroll programs have decreased bad turns and bolstered renewal rates by the fact that they tend to stay in their units 66 percent longer than conditionally approved residents who moved in with extra deposits. That is a win-win for residents and community staff and solves rent payment issues.
For more information on eliminating friction in the rent process, download the latest report on rent from payroll here.
About the author:
Ellen Calmas is co-founder and executive vice president of Neighborhood Pay Services, LLC / NPS Rent Assurance and brings 25+ years marketing communications experience with Fortune 500 and entrepreneurial companies to her role in strategic planning and marketing and sales support. She is also responsible for brand positioning, outbound marketing and digital networking as well as coordination of partner programs. Ellen has held senior management positions for marketing communications firms serving such clients as GlaxoWellcome, Bausch & Lomb, Avon Products, Heinz USA, AT&T, The House of Seagram, among others. She actively supports numerous health, civic and arts organizations throughout the Boston area and currently holds board positions for Silent Spring Institute, a leading research and advocacy group dedicated to identifying links between women’s health and the environment. She received her B.S. from the Roy H. Park School of Communications at Ithaca College. She can be reached at 617.209.3048 ext 104.