When tenants start paying rent late, especially if it’s more than 1 week late, chances are they will never catch up. The very first time they are late paying the rent, you must charge them a late fee. You must set the tone early in the landlord-tenant relationship. Your goal is not to be friends with the tenant. Your goal is to make money. Your goal is to get a good return on your investment. When we were beginner real estate investors, we tried to be nice and friendly. We tried to give tenants a break. We found that the more we gave them a break, the more they took advantage of us.
We currently have a tenant who is renting a 2 bedroom condominium for $1150 per month. His very first rent check was late. He called us to let us know the rent would be late. We told him to send the $50 late fee with the rent. That set the tone. Once a tenant is late, it is very difficult to catch up due to paycheck cycles. So, for the past 4 months, he has automatically paid the late fee every month. That’s a nice little bonus for us and increases our return on investment (ROI)! Check with your state regulations to determine the highest late fee you can charge. Typically, it is a percentage of rent. If your tenant is more than 2 weeks late, it is time for additional measures. To learn more, click here.
The opinions expressed herein are solely those of the Author/WebMaster. Before taking any action, please consult your real estate, financial, and legal advisors.