The New Revenue Recovery: Efficient Evictions to Make Properties Whole
In a perfect multifamily world, monthly rent payments would always arrive on the first of the month and any outstanding debts would be settled at the time of move-out. Unfortunately, that is not the reality. Debt recovery has become just another part of the leasing lifecycle, and the economic implications of the pandemic have not done anything to alleviate the potential for rent loss.
Typically, the task of tracking and pursuing resident debt falls to onsite property managers, who are overburdened and time-taxed with the day-to-day responsibilities of running an apartment community. Property managers already juggle multiple administrative processes, and debt recovery can become the stressor that begins to expose cracks in the dam. It is not a part-time endeavor, and without a diligent, automated approach an operator will inevitably begin to leak revenue.
Multifamily is beginning to realize the operational benefits of technology solutions and third-party services to free up onsite teams to perform the jobs they were hired for. A new revenue recovery process built with automation and integration better positions operators to mitigate the risk of bad debt and optimize the debt recovery processes. Finding and implementing best practices in eviction processes and installing a stopgap to prevent revenue from slipping away, ensures properties are made whole.
Take the task from property teams.
Property teams are not debt collectors. When encumbered with the responsibility of debt recovery, they are generally ineffective for a number of reasons.
First, onsite associates have too many other responsibilities on their plate. They are focused on the tenets of their jobs: fostering leads, leasing homes and delivering a living experience that drives resident satisfaction and lease renewals. Eviction management and debt recovery both fall into the category of “have to” and are often something that they dislike and causes them stress.
Secondly, onsite associates are nurturers by nature. Their commitment to assisting prospects and current residents make it difficult to assume an adversarial stance with their renters. Debt collection isn’t a task that they want to engage in to begin with. If they can put it off, they probably will.
But procrastination only causes additional problems for both properties and residents. Whether action is taken or not, the clock starts on the effective debt recovery window as soon as the resident moves out. By automating the process, operators can ensure that a collection is initiated in a timely manner.
When the balance is finalized, the process begins.
When a resident vacates their home, property teams are more concerned with getting the home turned and ready for the next renter. An empty apartment home captures no revenue. There isn’t the same impetus placed on recovering the revenue still owed by the previous resident.
Also, once the former resident has physically left the community, they are typically out of sight, out of mind. But it is important to get to work on debt recovery while the matter is still fresh in the minds of management and residents. The optimal period to address potential billing discrepancies comes immediately following move-out, right after the final billing statement is finalized. Depending on onsite associates to revisit the debt recovery process for the previous resident, once their attention has turned to onboarding the next renter, is challenging. And waiting even a week to engage residents about unpaid debts can be costly.
By setting those notifications to go out to residents as soon as the balance is finalized, operators curb former residents’ ability to say, “I wasn’t informed,” or “I didn’t know.” Automated alerts document the validity of charges and inform residents of their outstanding balance immediately, rather than waiting until they have moved on with their lives.
Automating the debt recovery process puts operators in a position to effectively capture missing revenue, but there are further financial incentives to resolve resident debts quickly.
Avoid collections, retain revenue.
The objective for property teams should be to get outstanding debt resolved in the first 60 days after move-out or eviction, because once the debt is turned over to collections the property loses around 40% of that potential revenue. On the flipside, rapid resolutions via automated processes and third-party services can still capture higher returns.
Revenue is always more front-of-mind at the corporate level, and through the new revenue recovery that leverages integration and automation, companies can keep a finger on the portfolio wide pulse of debt recovery efforts. Automation provides direct visibility into property-level actions, the status of claims, the work that still remains to be done and the time remaining to wrap up the process before collections services are engaged.
Automated solutions keep the debt recovery process on track, holds everyone involved accountable and facilitates more resolutions prior to unnecessary escalations.
How Resident Interface Can Help.
When it comes to the eviction process; speed, compliance, and transparency are key.
Resident Interface’s full-service eviction management solution, Possession Partner, offers consistency and ease every step of the way – from notice to eviction.
Possession Partner ensures that evictions are compliant, organized, and completed professionally, proactively, and transparently.