In 2014 there were over 3.4 million eviction cases in the apartment industry. What’s more, if you manage class B/C properties delinquency rates of 10 – 30% are quite common. While the direct implications of this situation are obvious, what’s often overlooked are the indirect and opportunity costs associated with how you manage the process.
The traditional approach multifamily operators take for delinquency management is inconsistent, inefficient and opaque. The result is that operators expose themselves to far greater risks (and to make matters worse, these risks are typically hidden), it increases costs, creates blind spots and negatively impacts the overall operation of the property manager’s asset.
What’s Wrong with Delinquency Management
While nearly every operator – or even property – takes a slightly different approach to how they manage late rent payments, there are 3 commonalities that represent the core problem.
This means that the likelihood of details falling through the cracks, and mistakes being made can increase exponentially. Within the last six months, we’ve seen, firsthand, the consequences of this approach. Specifically,
We could go on. All of these cases represent lost revenue, higher costs and greater disruption. This could have all been prevented with a modern approach to delinquency management.
A Modern Approach
Solving the delinquency management process requires the integration of three core components:
The effective use of technology to streamline the process and create transparency.
A clearly defined, disciplined and consistent system that eliminates emotion and inconsistency when dealing with delinquencies.
The utilization of specialists with deep expertise in managing a highly variant, complex process.
The successful integration of these three areas provides significant benefits to the operators:
Lower costs associated with delinquency management.
Consistent, repeatable process that yields better performance.
A tighter process which reduces the frequency of delinquencies while also enhancing the overall resident and employee experience.
Reduced risk exposure.
It’s easy to overlook delinquency management with a feeling that there isn’t much you can do about it. Remember, however, that every dollar of cost reduction is a dollar that goes directly to the bottom line and typically results in $16 to $20 of equity value.
Over the course of the next few months (and beyond) ClickNotices will be sharing the stories of operators that have taken command of their process, highlighting how it did and the impact it has had. We look forward to you joining us on the journey.