Most people, who find themselves behind in payments and facing the real possibility of losing their homes, are in reality, only a few payments behind. They cannot understand how things got this way and are ready to grab the business end of a sword in order to get out from under the pressure.
Well, there may be a couple of easy ways to get out of it. The first step is by expanding your mind in order to get a little more creative.
In business, companies routinely sell shares of the company or of its future earnings; this is done with things like stocks and futures. This helps to save the business by stabilizing things until a permanent solution is found. In the case of futures, the sells bring in needed income that can be used for any purpose. If the investor takes a chance and guesses right, it might be profitable. Theses methods all delay things until a time that will hopefully be more stable. Enter the concept of factoring.
Loosely defined, this technique is used to gain credit by some business owners to get over lean times. What if you were to use this concept with a twist to solve financial problems?
Consider offering your tenants a discount for paying in advance; say, 5% for every month they pay in advance. If rent is, $1,000 and they pay three months in advance they save $150. Consider, for a mom of two, that is nothing to sneeze at. Crunch the numbers, make it possible for a tenant to save up to half or even a whole months rent just by prepaying.
Think about incentives for paying on time, not just fines for paying late. Remember, there is a difference (I’m not talking about the incentive of “not” being fined if you are late). Here is an example of what I mean; let’s say you have an apartment building and you announce you will have a “Rent Holiday” in December; for every resident who pays rent on time, every month. (This will make you the most popular landlord in the area for sure; just when they need it the most, at the holidays, you come through)
You may ask, “why”? Simple. The cost of people not paying on time is probably what has gotten you into the cash flow trouble in the first place. When we purchase real estate, we count on all of the in-flow of capital blessings and falsely believe that this will happen for us without fail. However, what if your tenants make you worry and wait for the money! Along with the strain on your wallet, you are faced with the ultimate strain on your state of mind.
What seems like a big favor from you may actually benefit you more. You benefit from more rents being paid on time; more people being drawn to your establishment, more word of mouth advertisement and increased tenant loyalty. In addition, if you place rents at rates to absorb the “gift” during December you may end up not losing anything at all.
As an extra bonus: work out deals with area stores to save your renters money by buying as a unit. This can be as simple as giving area businesses a call and giving them permission to leave flyers or if your property is secured, have your security guard or even you yourself can distribute the money saving flyers. Saving your tenants money means more chances of receiving “on time rent” payments. Look for ways to add real value to your property, in ways that mean “worth” to couples, singles and families. You will attract more people and your financial worries will be smaller. Remember, add value whenever possible. If there is a children’s event or family event in town, try to get discounted tickets. Some shows have this already set up! All you need do is ask.