Rent DelinquencyRent delinquency: income billed but not collected.

What rent delinquency means

Rent delinquency is the unpaid balance on resident accounts after the due date and any grace period. It is often tracked by how late the balances are, such as 30, 60 or 90 days.

High delinquency lowers economic occupancy and net operating income. If amounts are never collected, they become bad debt and are written off.

The delinquency rate formula

Delinquency rate = unpaid balances past due / rent billed for the period

Report it both as a dollar amount and as a share of billed rent, and age it so a few large old balances do not hide a growing number of small new ones.

A worked rent delinquency example

Illustrative figures, not from a real property

A 60-unit building bills $90,000 of rent for the month. By the 10th, residents in 6 units still owe a total of $7,200. The delinquency rate is $7,200 / $90,000, or 8 percent. By month end, $5,400 is collected and $1,800 is still owed, 2 percent.

The month-end figure is what hits income. The early figure tells you how much follow-up work the month needs.

How managers limit delinquency

Careful screening, clear lease terms, simple payment options and early, consistent follow-up that follows the law all help. Past-due balances show on the rent roll and should be reviewed every month.

Nevada has specific notice rules for unpaid rent, so collections must follow them step by step. Our article on how to reduce rent delinquency covers the process.

Rent delinquency on a rent roll and a T12

On a rent roll, delinquency shows as past-due balances by unit. On the what is a T12 in real estate statement, it shows as bad debt once balances are written off. A buyer who sees low bad debt but large past-due balances on the rent roll should ask whether old balances are being carried instead of written off, which makes income look better than it is.