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Q&A with Bill Gray, The Collector

Bill Gray is an independent consultant who has been assisting landlords and property management companies nationwide in addressing the issue of tenant debt since 1997.

Bill Gray is an independent consultant who has been assisting landlords and property management companies nationwide in addressing the issue of tenant debt since 1997.

So far, he has personally reviewed over 70,000 such cases where tenants owe payment to their landlords. The combined value of these accounts is in excess of $200 million dollars. He has also written the book “My Tenant Owes…,” a guide and reference book which provides scenarios a landlord may encounter and solid practices that every landlord should take to minimize tenant debt. He also writes regularly on his blog named 'thelandlorddoctor'

He talks to MHN Online News Editor Anuradha Kher about how to avoid tenant debt, the most common mistakes and how to avoid them.

MHN: Why do you call yourself the landlord doctor?
Gray: While the words landlord doctor might sound unusual, it is much shorter than “the guy who knows a ton about tenant debt and is willing to talk straight about it.”

MHN: What is the main reason property managers have tenant debt?
Gray: After working with hundreds of properties, I have realized it is a matter of how the property is managed. If a manager does everything he is supposed to do, tenant debt can be substantially reduced. It all starts with the prospect walking through the door.

MHN: What is the most common mistake that lead to tenant debt?
Gray: Incomplete applications. Property managers very often are too eager to get the resident to move in. They overlook some of the red flags.

MHN: What should a property manager do to reduce tenant debt?
Gray: Move-in and move-out inspections are very important. Properties tend to just rush through them. Often after a tenant signs the lease, the manager immediately hands over the keys. At this point, many landlords miss a critical opportunity to gain profit and minimize the risk that the tenant will eventually leave owing money.

My experience is that when a tenant is two-three months behind on rent, he/she is not going to be paying the property manager back and more often than not, the unit is going to be in a bad state because the manager has been lenient with the resident.

MHN: What is the average size of debt?
Gray: In a good economy, if a property has more than 2 to 3 percent of its units owing money to the manager, there is a problem. The average size of tenant debt (excluding New York, Los Angeles etc.) is about $2,500 to $3,000.

MHN: Can you avoid debt altogether?
Gray: No. Debt is inevitable. All businesses have some debt.

MHN: What are the most common reasons people owe rent?
Gray: It’s divorce, loss of job or sickness.

MHN: What can a manager do to recover debt?
Gray: A property with 100 units can hire a collection agency to recover the money, report to the credit bureau and be patient. It can take up to six months to a year to get the money back if at all. The professional collection agencies will not take on small properties as business. So the small managers only have one option. Report to the credit agency.

MHN: What can property managers do to screen a tenant other than credit check?
Gray: A vital part of tenant screening requires more than learning about applicants, their employment and credit history—it’s learning everything you can about their previous rental history. Yes, former landlords who have rented to this tenant before have a wealth of information, which should be weighed carefully before you approve an application.

All the following steps should be followed:

  1. Call previous property manager/landlord to find out the person’s payment history and whether they left the unit damaged etc.
  2. Ask for employment proof and pay slip
  3. Ask them to bring a cancelled check from the previous month
  4. Do a criminal check
  5. Do a sex offender registry check
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