Dealing with Arrears
Zero tolerance? I don't think so.
Forget about property mangers who say they have zero tolerance for arrears. They are not being honest. Think about it: what does this really mean? If a new tenant doesn't set up an AP in time for their first payment, and pays a few days late.... is a good property manager going to get rid of them? A beneficiary has a problem with WINZ - will the 'zero tolerance' manager chuck them out? Or will a good property manager work to solve the problem with WINZ so that the landlord doesn't have a gap between tenancies (after all we have 3 weeks bond to cover any shortfalls).Zero tolerance statements are just marketing guff. A good property manager knows to pick and manage tenants for the type of property and for the area. The only way I know to have zero tolerance on arrears would be to only have Epsom and Milford properties to rent out. In some parts of Auckland our landlords know they are only going to have poor or beneficiary tenants who will struggle to pay the rent. They also know they need a realistic property manager who can get WINZ to pay the rent directly to ensure that it does get paid, or make sure they are that if they have to go, the bond will cover the arrears amount.
So it's Horses for Courses, I'm afraid! With some rentals you need a manager who knows how to pick the best tenant from a bad bunch, and how to get the maximum amount of rent from them without suffering real losses.
The REAL TRUTH about rental arrears
About 1/2 of all tenants are extremely conscientious and organised. They will make sure an AP is set up and always pay their rent on time. Another portion are reasonably okay with managing their money, and with a prompt will get everything set-up to pay. Problems arise occasionally due to mistakes, job losses, marriage break-ups, and illness. These tenants are generally worth having, but may need a little push to get a repayment plan in place if they fall behind on the rent.Then there is a group of poor money managers. These are the tenants who need to know we are on top of them, so they don't try it on, and so they don't fall behind. They need to know that they can't get away with late paying, and need a watching eye kept on them to ensure they get too far in trouble. In the end we can always use the bond to pay arrears if we have to replace them.
Some of rest are WINZ clients, who never have enough money, and from time to time make extremely bad choices (or spend all their money to going to a funeral or wedding). They could be part of the group above, but if they consistently fall in arrears it is just a matter of time before they will be ex-tenants. Here we look to get repayment commitments, which we then formalise through a Tenancy Tribunal order. When they breach their commitments, we can easily move them on without loss to our landlords.
Finally, there are the ratbags who never intend to pay the rent. I would love to say they never get past us, but this does happen to all property managers from time to time - no matter how experienced we are (the others won't admit it). These Ratbags are skilled at giving false ID details, and setting up false referees to foil property mangers credit and reference checks. Some are very plausible con-artists. They know how to game the system to keep in a tenancy as long as possible while paying the least. Once they know we are on to them, they tend to move on. The trick is to get them out before losses larger than the bond arise.
