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BEING SOFT ON COLLECTIONS DOES NOT HELP ANYBODY
Written by Frank Rolfe and Dave Reynolds,
MobileHomeParkStore.com, LLC
When I first got in the mobile home park business, I was
very inexperienced in collections. My natural instinct
was to be nice to my customers and never offensive. So
when I first encountered customers who would not pay
their rent, I did not want to offend them by filing
evictions. Instead I tried phoning them or sending
reminder letters. Time marched on. After they promised
to pay several times and still never did, I realized my
methods were not working and that I would need to
“toughen up” and change my ways – and I started filing
evictions as soon as I could once they had failed to pay
on time.
You know what I discovered? I discovered that this was
the best thing for all parties involved. Here’s why:
Some people need strong direction.
Just like kids in school, some people need a firmer
hand. Your filing of eviction may be the trigger that
the tenant needs every month to pay his rent.
Once you let a tenant get more than one month behind,
they are doomed.
I learned early on that most mobile
home and trailer park residents have great
trouble saving money, or showing a surplus from their
paycheck. If you let them get more than one month back
(and one month is pretty bad too) they will never
be able to get caught up. You
are actually doing them a disservice if you let them get
behind. They can adjust their spending priorities or
borrow from relatives and get current if you get tough
early on. Think of your own mobile
home park mortgage. If you let yourself get
three months behind, could you get current overnight?
Being tough on collections trains all of the tenants on
the correct spending priorities. Those priorities
should be their taxes, housing, auto payment, insurance,
gasoline, utilities, and then all the other fun stuff
like cell phone, beer, etc.
Not to sound like there is some great “bettering the
world” angle here, but maybe their lives will be better
because you taught them this lesson.
It is not fair to the other tenants if their neighbors
don’t pay rent but still get to live there for free.
Not only will everyone stop paying eventually when the
word gets around, but it is just not morally right.
Being tough on collections, believe it or not, is the
only fair way of dealing with the issue.
If
the tenants don’t pay you and you can’t pay your bills
then the park will shut down and nobody will have a
place to live, or they will have to spend $3,000 moving
their trailers to a new mobile home park.
Most everyone flourishes in consistency. If the tenants
know the rules of how things operate, they are better at
meeting the rules and feeling secure. This is true in
any enterprise or relationship. If the tenant knows the
rent is due on the first, late on the 5th,
and they get evicted on the 15th, then they
know what to do. When you make payment plans and are
soft one month and tough the next, everyone is confused
and unhappy.
It is also important to remember that a tenant
who does not pay their rent on time, but does ultimately
pay their rent, is your most profitable customer,
assuming you have a significant late fee. You should
not become discouraged if many people do not pay on
time—you should be enthused! Those late fees are
straight profit.
So don’t be afraid to be tough on collections. You are
really just following the natural order and it will be a
win/win solution for everyone!
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