Rent Write Off

We are nearing the end of the first section of our property management budget discussions. Up to now we have been penning about rental income and the various losses that are booked against it. They come in the way of; loss to lease, vacancy and various marketing related concessions. To round it out we are going to discuss the Rent Write Off line item.

Rent Write OffBad Debt Rent Write Off

Rent Write Off can be summed up simply – it is monies that are not collected as a result of residents not paying rent. Most likely for multiply months as it takes some bit of time to evict a resident for non-payment. In some cases 90 days or more.

Rent that is written off should be booked in the month that they it is incurred. That is to suggest that if a resident moves out and the account is reconciled (for some of you – that means that a SODA is completed) and an amount is left outstanding, it is written off as debt that has a slightly better than slim chance of being collected.

One item of note on this point; you will likely be writing off an amount that includes late fees, NSF fees, charges for damages, etc.. With that in mind, the only monies that get booked to Rent Write Off are in fact rent monies. The fees and damages are booked to a line item we will discuss in the coming weeks.

In the mean time, I am interested in knowing if your company practice is to book the write off in the month your accounts are reconciled or do you apply a lag time?

Your – always curious – multifamily manic,

M

Pic props: Urbandigs.com

 

Author: Mike Brewer

Out to put a dent in the multifamily universe. Love compelling conversation...