#apartmentbudgeting
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 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
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Student Concession
We are continuing our budget discussion this week with another short and sweet concession entry. Student concessions are used to attract those who are pursuing advanced educational opportunities at schools or institutions around your apartment community. This is a way that apartment operators can both attract and retain students in addition to giving them cause to talk about you. It’s all marketing all the time.
Concessions or Discounts
As an item of clarity – a concession is not a discount and a discount is not a concession. Both impact the bottom line but one lives on while the other has a one time impact. Student concessions are typically given up front at the beginning of the lease and or at the time of renewal. They are considered a one time event whereas a student discount is some that lives on over the life of the lease. Example of a concession might be: $200 off of your June rent if you move in by June 10.
A student discount on the other hand is a rent reduction from the market rent over the course of the lease. Example: you give a 5% or flat dollar amount discount off the market rent rate for the term of the lease that you sign if you move in by June 10. Both have an impact on the bottom line and both have a potential opportunity for you in the way of marketing.
Your – continuing the budget journey – multifamily manic,
M