5 Tips For Successful Tenancy Debt Collection (Private Landlords)

1. Find the Tenant with the Best Merit

Always rent to someone who has the best merit out of the pool of applicants for your property.  Property investment is a business and you want to be doing business with the best possible person who can help you realise your investment potential with the least amount of real and perceived risk.  Call it tenancy due diligence if you like.  Put in the hard yards at the very beginning, interview your tenants, reference and credit check them to find out what they are like as tenants and debtors, find out if they had ever been involved in a Tenancy Tribunal case, get an understanding of the tenant’s way of life, all this information can help you pick the best possible tenant to work with.

2. Collect the Right Information at the Very Beginning

Information gathering is most effective at the very start of the tenancy when both parties are co-operating effectively and have a good relationship.  This is the time when your tenant is willing to give you more personal information.  Treat this as a window of opportunity and ask for as much information as you can think of including identification, alternative addresses for service, phone numbers for family members, next of kin, work numbers and other contact details.  Should the tenancy deteriorate for any reason and the debt collection process kicks in, the debt collectors can serve you better if you can supply them with more means to contact the tenant.
Additionally, always make sure that your tenancy agreement contains a debt collection clause making the tenant responsible for debt enforcement charges relating to the tenancy.
Also very crucial to being an effective landlord is to document all your history with your new tenant from day one. Make sure all your communication is confirmed in writing and any agreements or amendments to agreements are in writing and signed.

3. Ask Referees the Right Questions

Here are some basic questions you should always ask a referee:
  1. How long have you known the tenant and in what capacity?
  2. Can you confirm the tenant’s phone numbers and contact details?
  3. How regularly do you have contact with the tenant?  When was the last time you had contact with the tenant?
  4. Have you ever had a creditor/debtor relationship with the tenant?  If so has the tenant always been on time with payments?
  5. (If the referee is an ex-landlord) What were the reasons for the dissolution of your tenancy?  Would you ever rent your property to the tenant again?
If the referee cannot give you satisfactory answers to any of the above then they should not be treated as referees at all.  Go back to your tenant and ask for more references.
Depending on who they are in relation to the tenant you should ask specific questions in addition to these listed. For example, when speaking with current or previous landlords you should ask about cleanliness, rent arrears, communication, maintenance, and general ease to deal with whilst you may want to ask their employer to confirm their tenure, position, and confidence in their future with the company. Lastly, we would suggest a general Google search to see if they are prevalent on any social media platform or other websites that could confirm their character and references.

4. Act Quickly

Small problems become huge problems very quickly, especially with compounding rent arrears. On the first day of a rent default, the amount owing may seem negligible.  But left alone, debt has a tendency to fester into something unmanageable.  Always be up-to-date with your rent ledger, ask your tenant to address rent arrears immediately.  Finding an extra $400 in one week is a lot easier than repaying a $3,200 tenancy debt when the rent becomes 8 weeks late.

5. Bring in the Professionals

Get the Tenancy Tribunal involved ASAP.  If your tenant owes you rent arrears or compensation for property damages, apply to the Tribunal and get the debt recorded in a sealed Tenancy Tribunal Order.  Once you have this order you can enforce it by engaging the services of a professional debt recovery agency.  These agencies have processes and tools available to them to better track down and recover losses on your behalf.

Don’t have the time to do it right?

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