late fees

Rehabbing, Fix and Flip, Rental Properties
21

There’s your quote…even though you fail to bother with punctuation, there actaully is a question…

Hastedt Life Rule #8 - If you can’t stand the answer, don’t ask the question…

Keith

22

All tenants are good until they stop paying rent , that when it get’s nasty, i currently have about 7 units and the reason i posted this message was because i know the late fees are extrem but it has been working, the problem now is that i have two tenant that i might have to take to court, when i spoke to the state they said as long as both parties sign the lease then it ok , i just think they were blowing me of , so i was just trying to great feed back from people that have been in court was this, i basicly know that the goal is to just get the tenants out , chance on you getting money back from them are slim i geuss.

i live in fl where the rental history was good until about a year ago , it is just latly that things are going bad

Thanks
P.s I don’t mean to be rude i just dont like to be put down eathier

23

I do charge reasonable late fees myself, but the way to really get a tentant to pay is being overlooked here. In my experience, it is not with punishment, but with reward. Let them know in advance that they receive a good discount when they pay before the due date.

24

That is not legal in all states. Anyone considering that should definitely check their local laws before offering incentives like that.

25
Let them know in advance that they receive a good discount when they pay before the due date.

Tenants are not complete morons. They can figure out that there is no difference between paying a $50 late fee and getting a $50 discount for paying on time. I have done it both ways and there is no difference in the result.

Tenants usually don’t pay the rent because they don’t have it. In most cases, it is a self-inflicted wound. I’ve evicted tenants because they spent the rent money on a dog; on crack; on a car; on a big screen tv; on a cellphone, etc, etc, etc. They make stupid decisions and don’t have the rent. Whether they get a discount or pay a late fee, they’re not going to pay if they don’t have it. Other times, they don’t have the rent because they got fired (usually for good cause), quit their job, got their section 8 terminated; had to pay fines in court, etc.

My rule is simple. If they don’t pay IN FULL AND ON TIME, they’re immediately evicted.

Mike

26

FYI …there is a difference between a $50 late fee and $50 off of rent. $100 difference to be exact.

27

How do you figure?

Rent is $500:
LL charges $550, or $50 off if it is early.
LL charges $500, or $50 late fee if it is late.

Both are $550 if they are late, both are $500 if they are on time.

28

My point is

$450 if it is early
$500 on time
$550 if it is late

This a $100 diference to the person paying rent.

29

I don’t understand the credit back if someone is on time. they should always be on time anyway, if my payment to the bank is not on time they charge me a late and int, they don’t give me a discount if i am early

what i am looking for is something that will scary people if i need to get them out, i don’t want to go court ,that will be the last thing. every time you try to get someone out all its does is cost you more money.

Thanks

30

To me that’s crazy, that’s $50 right out of my cashflow because the person gets it to me a bit early. I agree with patat that they should always be on time anyway. Getting it 2 days early doesn’t allow me to make any more money by having access to that money for 2 extra days.

31

$50 was just a number thrown out there… not a real world number on that amount of rent.

I guess I am just too nice. It is not just about the money to me, it is about treating my tenants the way I would like to be treated.

32
My point is

$450 if it is early
$500 on time
$550 if it is late

This a $100 diference to the person paying rent.

That’s ridiculous. If your real market rent is $500 with a typical positive cash flow of $100 per month, you’re giving away HALF of your cash flow for nothing! That’s CRAZY (just as Rich said). In fact, it’s simply financial suicide. I don’t give away half my cash flow to encourage something that I insist on anyway.

It is not just about the money to me, it is about treating my tenants the way I would like to be treated

NOT ABOUT THE MONEY? Are you kidding? I certainly would NOT run a business so that I can treat people nicely. BUSINESS IS ALL ABOUT MAKING MONEY!

Mike

33

It is about making money. But that’s not the only thing. I probably look at it a little differently then some of you due to the fact that it is not my only source of income. :biggrin

34

Primary or secondary source of income has nothing to do with it. When I invest in something I want a return, I’m not try to save the manatees.

35

I have a high first income, and i still don’t give anyone a break for early payments, i think that nuts. i always stick to my 150.00 late fee, i found out that in fl as long as agreed you can charge a one time late fee a rental month. i still did not get a confrim on how much but three source say it has to be signed by both parties so i guess my new lease are going to have a 250.00 late for the month and hopefully some of my tenants will be late.

Thanks Everyone

36

Nuts it may be. But I have never had one late payment in three years. I don’t know how many landlords can say that.

37

I would say if you never had a late fee in 3 years then your rents are to low.
I think you need to push the limit of rents as high as possible. My 2 cents

38

I think the rents and having a late fee have nothing in common. If your rents are too high, that means the tenant leaves and finds a place that’s cheaper. It’s how I get rid of bad tenants that scare away good tenants. Every time I tell them I’m raising the rent by a lot, they leave. Win-win for me.

If the tenants are late, that means they’re having money trouble and maybe you didn’t do a good job screening. Of course sometimes it doesn’t matter what kind of screening you do, things happen.

Now the sign you’re not charging enough rent is if you have a waiting list of people who want your apartments. Most people don’t have that problem.

Oh and I don’t think I’ve ever collected a late fee. Either they were evicted or left without paying the rent has been my bad tenants. We just have that rule in this state that you can’t collect a late fee until it’s 30 days late.

39

How many rentals do you own? I’m guessing only a few and would guess it is merely good luck that you have not had any lates.

40

rlack,

Rich is absolutely right. Not having a late payment in 3 years only means that you don’t have many rentals. If you have a lot of rentals, you will have tenants paying late (and being evicted) with some frequency. We evict 1% per month on average due to non-payment. If I only had one rental, that would take over 8 years before I would have a late payment/eviction and that’s my average with many low income rentals. If you have all SFHs, your late pay rate should be significantly lower. Also, as Rich said, luck plays a role in the equation. If you have only a few rentals, you may not have a single late payment for 10 years and then have 50 the next year.

Good Luck,

Mike