How long do you give late paying tenants to pay? - Posted by Steve

Real Estate Investing
#1

Posted by ToolBar_SC on December 01, 2000 at 10:09:34:

I agree with JohnBoy on the length of time. I’ve had renters that have given me every excuse under the sun to try and explain why they don’t have the rent. I have one pat answer for any and all excuses. My answer cuts them off of trying to drag me into their problems and pulling at my heart strings.

My pat answer is…“Well maybe you just can’t afford to live here anymore. If your out by x days I’ll forgive the late payment and this months rent. If I have to evict I’ll demand eveything that you agreed to in the rental contract.”

They usually come up with part of the money on the spot and we work out getting the rest, including late payment, BEFORE the next months rent is due.

You have to be willing to evict on Christmas day (as I was six years ago with one of my renters). That renter, by the way, is still with me and in six years has had only one other occurance of the rent being late (they called me BEFORE it was due, explained the situation, paid me a portion of the rent when it was due, and we worked out the schedule for the rest owed).

You have to treat this as a business. DON’T even let a renter start a sob story. Give them the pat answer and follow through. This includes, if the rent is due by 5:00pm on a certain day follow through by notifying the renter a 5:01pm that they are late and you are notifying them that the eviction process has started.

Go get the rent NOW!!!

ToolBar_SC

#2

How long do you give late paying tenants to pay? - Posted by Steve

Posted by Steve on December 01, 2000 at 08:11:43:

I have some tenants who are late paying. They say they will pay at the end of the week but, for the past couple of weeks there has been other emergency come up where they could not pay their rent. How long should I go with these tenants?
Thanks,
Steve

#3

How long do you give late paying tenants to pay? - Posted by TomC (Md)

Posted by TomC (Md) on December 01, 2000 at 11:46:49:

Your tenants pay 1 week late? You lucky dog…

I love tenants that pay about 15 days late. In Montgomery Co, MD the local law is that rent is considered late if not rec’d by the 10th. If it is postmarked by the 10th and I recv it on the 11-14th, no problems.

But if I get my money on the 15th, I get to charge a 5% late fee. Earning 5% on your money in a period of 15 days is an incredible return on investment. If you were to annualize it, that is over 120% !! (simple interest)

OK, back to your question…

If I don’t have in my hand on the 15th, I file the papers at the courthouse. I have plenty of blank forms so that I can fill them out ahead of time, and just drop them off at the cashier’s desk.

Although both of my tenants are paying on time now…grrr.

TomC

#4

Re: only til the end of the due date - Posted by Jim Rayner

Posted by Jim Rayner on December 01, 2000 at 10:50:23:

Because of state laws phibiting late fees and current interpretation that incentive to pay on time is just another form of late fee, i only allow them until the close of business on the due date. Issuance of a 14 day pay or quit is automatic and delivered in person on the next day if they still don’t pay. Sate law here allows them 10 days of the 14 in which they may pay and stop the eviction on the first 14 day notice in any 12 month period. Second notice does not offer them the option to pay in the 10 day window and payments accepted for “use and occupancy only” permits you to procede with eviction if you so chose. Educating them to the consequences has worked for us and we have only had to go to court once for non-payment of rent. Others have managed to pay in full within a few days when faced with the consequences of an eviction. I participate in National Tenant Network and make certain that they understand that their performance is reported to the ntn national database. I also have the advantage in that my market with its .6 percent vacancy rate offers them little opportunity to find alternative housing and the local landlords associations is a fairly tightly knit group when it comes to troublesome tenants.

in the past i have tried weekly payment plans but have found that they were not worth the trouble. its easier to accept use and occupancy paymnets and continue with the eviction.

#5

When to bend and when not to - Posted by KennS

Posted by KennS on December 01, 2000 at 10:50:05:

Steve,

I like to help my tenants out when I can. Here are things that I do:

  1. The first time a tenant is late, I will waive the late charges (up to the 10th of the month). I send them a letter explaining the late fees. In the letter I make it very clear that from now on, all late fees will be enforced, etc.

  2. I do everything by the book and I do everything in writing. I like for them to have the understanding that I am not flexible with contract issues. I am more flexible with issues such as tenant improvements, granting requests more often, etc.

  3. I have some tenants that have been with me for six years who have been wonderful. The house is kept in A1 condition and they are good people. Sometimes they pay late or have special requests. I bend much further for renters like this.

Good luck - Kenn

#6

Training your tenants - Posted by Bud Branstetter

Posted by Bud Branstetter on December 01, 2000 at 09:52:19:

As JohnBoy says do not waive late fees. I make the rents due on the first. The rents are set $50/mo higher than market and they get a discount if they pay by the first. There is then a per day late fee until I issue a notice to vacate. Issue them a demand(commonly 3 day) then a notice to vacate. After that 3 day period you can file at the local JP or other court. It may take 10-14 days to get a court hearing. Unless you got a very large deposit and checked their stability and credit, start immediately.

There are techniques like calling their employer or next of kin saying that it is urgent that you need to get in touch with them. That type of embarrassment a day or two after rent is due helps train tenants. If you hired a professional you would tell them to issue the notice promptly not listen to their problems. Be professional not harsh. Tell them that after the notices you will have to file in court. If they have the rent court fees and late fees by that time everything goes back to normal. Otherwise you have to rent to someone that is able to pay. You can make sure they know where to get help but don’t let THEIR problems become yours.

#7

How long do you give late paying tenants to pay? - Posted by JohnBoy

Posted by JohnBoy on December 01, 2000 at 08:29:36:

You go as far as your contract allows them and follow through by serving proper notices to pay or quit. Everyone has problems and must deal with them. Someone elses problem is not your problem the same as your problems are no one elses. The more you allow them to get away with things, the more they take advantage of it!

Ask them what is more important, what ever problem they may have right now or a roof over their head? If the problem they have will provide them with a roof over their head then deal with the problem and ignor paying the rent, otherwise take care of the rent FIRST and deal with the problem second!

Car break down and you need to have it fixed? Get a ride, take a bus, call a cab, catch a train, walk or whatever, but FIRST pay your rent or you may end up living in the car! Does your bank let you pay the mortgage late when YOU have a problem? Why would it be any different with you?

They need to learn to manage their finances better to allow for problems and be able to deal with them when they come up. It’s NOT your problem. Your problem is getting PAID so you can pay YOUR mortgage. Be sure to ALWAYS enforce any lates fees due!