Late Fees

Rehabbing, Fix and Flip, Rental Properties
1

How do you calculate and process late fees?

Is there a standard formula?

2

Howdy ResaleBroker:

One school of thought is to give a discount on the rent if it is paid by the 5th in full of $25 or more if the rent is over say a $1000.

I have used a late fee of $25 after the fifth and $5 per day there after. A lot of times I would wave the fees as long as I got the rent however. I deal with low income who could barely afford to pay at all. It could be bad choices too. Pluss I have a really kind heart and believe all excuses. I let one lady fool me into waiting on her tax refund that was due soon. On that date I went by and she had a uhaul in the drive and refused to pay. I wanted to block the truck but what could I do but file in small claims.

Robert Allen who I saw in person says “the rent is due on the first and late on the second and I am kicking you out on the third”. I forget what he says re late fees but by his quote it sounds like he has no policy just pay or no stay.

One thing I have learned too is you need to be the same for everyone. Even get it printed on posters and have it hanging on the wall in your office.

What ever your rule ends up being, try to be steadfast and firm with it and train your tenants that your rule is the way it is going to be everytime. I did not do this as I was too lazy and kind and nice and wanted to be liked etc

Thanks and hope this helps some

3

Thanks for the insight!

4

ResaleBroker,

In many areas, your local landlord-tenant laws dictate the maximum amount of the late fee and also mandate a grace period.

In one state, I have property in two adjoining counties. In one county rent is due on the first but late fees can not be assessed until after the 5th. In the other county, rent is due on the first but late fees can not be assessed until after the 10th. For both counties, state law sets the maximum late fee at 5% of the rent due.

5

I can believe that. I goes to show that you have to be up to speed on your local and state rules and regs.

6

Check the law in your state. That should take ten minutes on the I-net. Always have a written policy about rent payments and late fees. NEVER allow someone to skip late payments. They are a great profit center. I dont mind if my renters are up to 5 days late. Rent is due on the first, late on the 5th, deliver notices on the 6th, go to the courthouse on the 15th if arrangments are not made. Never change the dates, do not discriminate.