So far in our continuing series addressing Frequently Asked Property Management Questions, we’ve covered:

How Much Does Property Management Cost?

What Services Does Property Management Include?

How Often Will a Manager Visit My Property?

And Can I keep My Bank Account?

The next installment?

What Do I Do If a Tenant Consistently Pays Late or Doesn’t Pay Rent At All?

Another excellent question! And an issue that far too many retail landlords struggle with. But as common as this matter may be, it’s one of the more complicated problems to solve. More often than not, there isn’t one “ideal resolution.” The best course of action generally varies and depends on several key factors…

The Quality of the Tenant

Is this a tenant that’s typically reliable but happens to pay rent late on occasion?

Is this a tenant that pays rent, but consistently pays late?

Is this a tenant that pays late and is few months delinquent?

Or is this a tenant that has ceased to pay rent and is months behind?

The Frequency of Late Payments

Every month?

Every couple of months?

Once or twice a year?

The Amount of Outstanding Rent Owed

How much back rent is owned…

A couple of months?

More than six months?

Over a year?

The Difficulty to Re-Leasing a Vacancy

If a tenant vacates, of their own accord or is evicted, how difficult will it be to release the space?

How Do These Factors Impact Your Decision-Making Process?

It really boils down to how you chose to address different tenant types…

A Quality Tenant with Rare or Occasional Late Payments

This is a tenant well worth keeping and worth keeping happy. Thus, charging a late fee is likely not in your best interest.

A Consistently Late Paying Tenant

This tenant definitely deserves to be charged and late fee. And late fees should be leveled until the tenant gets the message and pays their rent in a timely manner.

A Delinquent Tenant

Continually charging late fees is only adding to their balance, making it that much tougher to bring their account current, and pushing than that much closer to breaking their lease and vacating the space. This scenario comes down to whether or not you really want to keep the tenant. Either you organize a payment plan and offer incentives to help the tenant bring their account current. Or you take steps to evict the tenant.

A Tenant Occupying a Difficult to Lease Space

A tenant that consistent pays late or is delinquent but occupies a difficult to lease space may be worth keeping. In this scenario, it’s a matter of weighing the potential revenue the tenant’s occupancy implies verses being saddled with a space you’re unable to lease for years to come.

As you can see, there are several important factors to weigh in deciding how to deal with late, delinquent or non-paying tenants.

But regardless of the circumstances, there are tactics you can employ to ensure tenants (generally) pay rent on time.

Strategies to Avoid Late Rent Payment

The most effective method to avoid chronic late rent payments? Employing: “The Carrot and the Stick.”

In other words, rewards for “good behavior” (the Carrot), and punishment for “bad behavior” (the Stick).

But let’s flip the script and start with the Stick, as “bad behavior” is what generally brings this situation to a head.

The Stick… This can take the form of both threats and actual punitive measures.

Late Fees

Late fees are typically written into lease agreements. But such fees are exercised at your discretion. Thus, if a tenant is late once or twice, you can threaten to charge a late fee. If a tenant is late on multiple occasions, you can exercise your right under the lease and charge a late fee. And you can continue to charge late fees if a tenant’s late payments persist.

3-Day Notice to Pay or Quit

Here again, you can threaten to post a notice. And if this fails to impress your point upon a tenant, you can make good on your threat and actually post a notice to prove you’re serious.

Eviction

To clarify, an eviction is a long, complicated, and difficult to navigate process that generally favors the tenants. One misstep in procedure or paperwork can completely foil your efforts and force you to start the entire process over again, from the very beginning.

As such, an eviction this should always be your last course of action. But both the threat and the exercise of an eviction action (at least initiating the process, but not necessarily carrying it through) can be a strong motivating factor that renders many tenants “scared straight.”

The Carrot… On the other side of the coin, you have incentives to motivate tenants to pay rent in a timely manner and keep their account current on a consistent basis.

Managing Late Rent

Let’s say a tenant has consistently paid rent late for 12 months. If that tenant can pay rent on time for 12 consecutive months, they will receive a 20% discount on their rent in the 13th month.

Or let’s say a tenant has consistently paid rent late for 6 months. If they can pay rent on time for 6 consecutive months, they will receive a refund of all late fees collected during the six months their payments were lagging.

Managing Delinquencies

Let’s say a tenant owes several months of back rent. If they are able to consistently pay rent on time for 12 months, a portion of the back rent will be forgiven on the 13th month.

Or let’s say a tenant owes a great deal of back rent. If they are able to consistently pay rent on time for 12 months, the landlord will agree to a payment plan in which the tenant can pay down the back rent without incurring any interest fees or additional charges.

These are just a few examples… There are a number of possible incentive programs to help keep tenants on track and up-to-date on their monthly rental payments.

Need Help Dealing with Late + Delinquent Tenants?

One of the key services professional property management provides is Tenant Relations Management. We’ll step in and deal directly with your tenants, taking the burden of frustration and stress off your shoulders.

And we’ll work with you to assess a given tenant’s situation, and make recommendations on when to take punitive action (administer the “stick”) and when to offer incentives (dangle the “carrot”).

For More Information on Professional Property Management Services

Visit our Services page at: cbm1.com/services


3466 E. Cesar Chavez Avenue, CA

Centers Business Management (CBM) leasing agent, Geoff Grossman, recently completed a lease transaction representing the landlord and tenant, Bank of America, on 680 SQFT ATM space. The unit is situated in a busy corner strip center is at the intersection of Cesar Chavez and Hicks, east of Boyle Heights and South of City Terrace. Boasting a diverse mix of A+ co-tenants, the property hosts Little Cesar’s Pizza, Metro PCS, Re Loya Insurance, and Opportune (financial services).


140 W. Anaheim Street, Wilmington, CA

Centers Business Management (CBM) Valley Division Director, Dave O’Connell, recently completed a lease transaction representing the landlord in a deal with Wing Stop, on a 1,600 SQFT retail space. The El Super grocery store + Rite Aid anchored shopping center occupies a full block along Anaheim Street, stretching between Avalon Boulevard and Marine Avenue in prime Wilmington. Along with the notable anchor tenants, the center also boasts a bevy of A+ regional and national co-tenants, including Chase Bank, Pay Less Shoe Source, Subway, Yoshinoya, Ace Check Chasing, and more!


10930 Long Beach Boulevard, Long Beach, CA

Centers Business Management (CBM) Valley Division Director, Dave O’Connell, recently completed a lease transaction representing the landlord and tenant, GameStop, on 1,592 SQFT retail space. The unit is in a corner strip center at the intersection of Long Beach Boulevard and Norton Avenue in prime Long Beach. In addition to GameStop, the center hosts a diverse mix of A+ tenants, including Metro PCS, Baskin Robbins Ice Cream, Wing Stop, Little Caesar’s Pizza, the UPS Store and more!


1407 E. Los Angeles Avenue, Simi Valley, CA

Centers Business Management (CBM) Valley Division Director, Dave O’Connell, and leasing agent, Brett Mero, recently completed a lease transaction representing the landlord and tenant, a local ice cream shop, on 2,405 SQFT retail space. The property is on East Los Angeles Avenue, between Executive Way, and Patricia Avenue, in the heart of Simi Valley’s central retail district. A massive, multi-block development, the Vallarta grocery store-anchored center also features a variety of A+ co-tenants, including, Golds Gym, Rite Aid, Simi Valley Cinema 10, and Chase Bank, and more!


Los Angeles, CA – August 2018, Centers Business Management (CBM) completes new leasing transaction with expanding fast food franchisee at Glendora Marketplace Power Center.

CBM leasing agent, Jason Ehrenpreis, recently completed a lease transaction, representing the landlord and a Fatburger franchisee on a 1,500 SQFT unit in Glendora Marketplace. Situated amid the community’s primary commercial district, Glendora Marketplace, the regions dominant power center is located on Lone Hill Avenue at the intersection of Gladstone Street in the heart of Glendora. In addition to Home Depot + Sam’s Club, the center’s notable co-tenants include a Wendy’s drive-thru location and Coco’s Bakery + Restaurant. And the pad in which the unit is located hosts Verizon Wireless, America’s Best Eyeglasses, Ortho Mattress, and a recently opened Blaze Pizza restaurant. Additionally, the center is surround by several sizable retail developments, home to a myriad flourishing tenants, including, Kohls, Home Goods, 24 Hour Fitness, In-N-Out Burger, Walmart, Costco, and many more. A stellar tenant roster that clearly makes this locale the area’s foremost retail shopping destination.

The franchisee is co-branding the site as a Fatburger + Buffalo Express (chicken wings) store. Both eateries are popular Southern California fast casual restaurants, with a strong, growing presence throughout the region. A multi-store owner, the francisee currently operates several WingStop + Fatburger locations throughout Southern California, and tentatively plans to open additional sites in the near future.

“With most desirable retail space fully absorbed, the biggest challenge for most tenants is identifying suitable sites,” says CBM leasing agent, Jason Ehrenpreis. “As such, competition is fierce for an ever-shrinking pool of available units,” Ehrenpreis adds. To combat this: “Landlords have to make capital investments in their properties to attract credible tenants,” Ehrenpreis explains. And, according Ehrenpreis, that’s exactly what Glendora Marketplace owners have done: “The landlord has invested a considerable amount of time and money in repositioning the restaurant portion of the pad building to attract new, exciting and quality brands to the property.” An effort Ehrenpreis feels has proven highly successful, noting: “This deal was the 2nd [Blaze Pizza, another tenant Ehrenpreis recently brought to the center, being the first] of three Quick Serve Restaurant spaces the landlord is seeking to fill.” And with only one unit remaining: “Interest is skyrocketing!” Ehrenpreis relates, jubilantly.

“Restaurant spaces are in high demand. But most restaurant tenants are only interested in ‘A space.’ And with such units basically non-existent, landlords’ only avenue to entice quality tenants are property upgrades,” says CBM President, Rick Rivera. “That’s how the Glendora Marketplace owners, who are clearly savvy retail landlords, are overcoming this growing challenge. And other landlords need to follow a suit if they ever hope to lease long-lingering vacancies,” Rivera asserts in reference to the tightening retail real estate market.

For more information about CBM and their retail leasing and property management services, please contact: Rick Rivera 310.575.1517 x201 | rickr@cbm1.com.

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This year’s ICSC Western Division Conference, scheduled for October 8-10, is happening just over a month from now.

As always, CBM is exhibiting at the convention. And once again, we’ve been assigned a prime end-cap locationBooth #1003 —  just inside the convention hall’s main enterance. The floorplan below indicates are our booth location — Just look for the big green dot ;—)

Are you planning to attend the convention? If so, please swing by booth #1003 and say hi! Members of Southern California’s leading retail leasing + property management firm will be on hand meeting and greeting.

We look forward to seeing you there!

Click to enlarge floorplan