What are the most effective rent collection strategies during economic uncertainty?

As someone who has been an owner/landlord where the tenants did midnight runs, you have to be in touch with your tenants if the economy is not strong. You have to speak to them and inquire about their business, take an interest. Explain to those who voice concerns about staying afloat that you are willing to negotiate, to be fair. But, I have offered commercial tenants free rent, just pay the maintenance and realty taxes and they still skipped. I learned a lesson- you can be the nicest most understanding guy in the world but once their business starts to tank they will do what is best for them and they will skip out.

We believe in proactively communicating with our tenants and encouraging them to discuss any issues they are facing with us. We use email as our primary communication medium and start with gentle reminders couple of days advance of the first of the month. We use a crm to automate this and generally find some tenants sending their rent couple of days earlier and occasionally communication from any tenant having financial hardship. We can discuss and come up with a corrective or payment plan as needed and a surprise avoided.

I AM SOMEWHAT CONFUSED-YOU ASK ME TO CONTRIBUTE AND THEN YOU TELL ME WHAT TO WRITE? THIS IS NOT A CONTRIBUTION--PLEASE TAKE ME OFF YOUR LIST OF CONTRIBUTORS. I PREVENT PROBLEMS BY GETTING GUARANTEED RENTS UP FRONT. A TECHNIQUE I WOULD BE GLAD TO ELABORATE UPON IF YOU TRULY WERE LOOKING FOR CRETIVE AND ORIGINAL CONTRIBUTIONS.

Your approach towards proactive communication with tenants seems very effective. Initiating regular conversations not only builds trust and goodwill, as you mentioned, but also creates a platform for understanding and addressing any concerns or challenges early on. This kind of open and empathetic dialogue is key in maintaining healthy landlord-tenant relationships, especially in times of uncertainty or economic hardship. Your emphasis on mutual understanding and clarity about lease terms also helps in setting clear expectations, which is crucial for a harmonious business relationship. Overall, it's a thoughtful and constructive strategy.

The best way to move forward is to have consistent dialogue with resident who is not paying. This allows you to setup payment plans or determine a different time of the month to make payments if the first of the month is challenging. You should always sent a notice after the 5th that rent is late and if a tenant isn’t receptive to working with you and communicating, then you have to work with your legal team to file an eviction.

Send timely default letters in strict accordance with the notice provision ensuring cure periods commence as quickly as possible.

I would recommend being invested in multiple units at once versus one unit at a time. The reason for this is for diversification of payments coming in. If you own a one unit and the tenant leaves or doesn't pay, then you have to cover the bill versus if you owned a 100 unit and the same thing happened. In my opinion, it's better to own part of a 100+ unit passively than to own 100% of a single unit, which does stroke your ego but doesn't get the job done financially.

You should already have a plan of action in place, depending on what state you're in. If you're in Texas, the process is much less of a headache than if you were in California.

By investing passively in a 100+ unit building, you're mitigating your risk exponentially. You also don't have to be a landlord on top of your W2 going this route. If you're making the income, it would be smart to invest passively starting out until your passive income is equal to or greater than your active income. Once this happens, you're able to leave your W2 and begin acquiring these same types of buildings actively, and you would also have a net worth and respectable portfolio of properties to show brokers when communicating the type of properties you want.