Landlording Rants Passive Income

Rental Late Fees can add up

Rental late fees can really add up month after month and can actually help add to your NOI (Net Operating Income.) Of course, sometimes they aren’t something you can predict.

So one of my tenants that I have, who I absolutely love (for the most part,) are paying late again this month. This is the couple that Kathy met when they were looking for a place and recommended that I rent to them and I listened to her? Don’t know if you guys remember that post a while back. Anyway, they’ve been awesome with paying rent (they paid a few months up front before moving in) and I’ve been extremely happy with the way they keep the property. They are a hispanic family. It’s mom, dad and 3 children and they really treat the property as if it’s their own and it really looks awesome!

Anywho, last month the husband calls me and tells me the rent is going to be late because he got arrested :-O He apparently got a ticketing for driving without a license and didn’t realize that the laws in PA are different than the laws in FL and he got locked up in a short amount of time after getting the ticket for not responding to the ticket.

Now, I’ve had rental properties for over 11 years now and I’ve heard all kinds of stories but I can honestly say that he sounded really upset and embarrassed about getting arrest. He said “it was either pay the rent or pay to get out of jail.” Obviously, he paid to get out of jail.

Their rent is due BEFORE the 1st of the month every month. So the end of Feb. he calls me and explains the above to me and says he’s going to send me $500 now and a post-dated check for $475 (for a week later that includes $50 in late fees.) I said ok. I mean I’ll take an extra $50, right? Their normal rent is $925, but there’s a $30 late fee charged if the payment isn’t received by the 1st and then an additional $20 if the payment isn’t received by the 5th of the month.

I get a call from the tenant today saying that having to pay the water/sewer bill ($221) set him back again this month and that he just sent the rent in the same way he did last month. He said “I sent you a money order for $500 for right now and a $475 check that’s post dated for next Thursday.” Sooooo he already knew to include the late fee. Excellent!

Now between you and I….I honestly, don’t mind if they pay their rent like this every single month. My mortgage is about $575 and not due until the 15th of every month (the latest date, of course, that it can be paid with no penalty.) So an extra $50 a month works out well for me.

What do you all think? Are you happy when your tenants are late and pay you your late fees? Now keep in mind I’m talking about the types of tenants I’m describing above…I’m not talking about dead-beat, losers tenants that you know you’ll most likely be evicted shortly anyway. The kind of tenants that you have to call and say “What’s up? Why haven’t you paid your rent?” I’m talking about the kind of tenants who perhaps had a “glitch” in their life but they are courteous enough to call you and give you a heads up and they make an effort! Grant it, I’d like the entire rent amount up front every single month, but hey….an extra $50 a month….why the heck not???? What’s your take? What are your late fees that you charge?

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4 replies on “Rental Late Fees can add up”

Girl, I’ve been enjoying late fees for months now and lovin’ it! She always tells me when she’s going to pay (usually 2 weeks late) and she already figured out the late charge and we’re good to go. I charge $25 plus $5 for each day (after the 5th) that the rent remains unpaid.

You know Shae I use to do the $5 a day thing too until I spoke to a big whig landlord in my area and he said that would never hold up in court.

But I guess I should think like this: if the tenants are going to pay it for months and months and months…then who cares if a some point in the future it won’t hold up in court lol

Know what I mean? I just figured it out with your method and the tenant would owe me $40 instead of $50 this month lol but that’s cuz I know he’ll pay 3 days after the 5th….but heck if he paid into the following week or so that would really add up lol

I have no rentals or experience in rental property so take this with a grain of salt. I’d be careful because he is setting a bad trend. They now are starting to feel comfortable with paying the rent late and may start to take advantage of it because they know you seem to be cool with it.

The extra money is great I’m sure, but to me it seems like a slippery slope.

Hey Scott,

I understand where you are coming from, but honestly I am ok with it. 🙂

Me, personally…I’m easy to get along with as a landlord but I don’t take any sh*t. I’m the type of person that if you tell me you’ll have your rent to me on this day (when it’s late) and it’s not there, I WILL start the eviction process and you will have the Notice to Pay or Quit notice on your door.

I’m pretty sure this couple is aware of that. The first time they made this arrangement with me I told them “ok that’s acceptable, however if the money is not available the day I deposit the check, I will start the eviction process.” And he, of course, got really upset and I tell them that I try to be as reasonable and understanding as I can, but I’ve been in this business a long time and I’ve learned all of my lessons the hard way and when a tenant doesn’t do what they promised they’d do in regards to rent, I don’t mess around anymore….eviction is started.

And that’s the truth with me. I’m not one of those landlords that will wait weeks or months and “wonder” where my rent is? (And yes, there are landlords out there like that. Ones that keep calling and calling their tenants for the rent.) Not me. Learned the hard way that if you have to keep calling and calling your tenants for the rent…uhh you ain’t getting rent.

So, honestly, I’m ok with him paying his $500 at the end of the month and then $475 the end of the first week. I was contemplating changing his lease to make just the higher rent payment due the 1st week of the month (I’m flexible when the payment is due, because sometimes folks get paid differently than others, ya know? Not saying this is their issue…budgeting is definitely their issue.)

But I decided against changing their due date to the first week because well at some point…they’ll get into a jam again and then pay $500 the first week and want to pay $475 the 2nd week.

So I’ll just leave it as is and honestly if they want to pay this way until the end of their lease….I’m ok with it. I’ll take the extra $50 from a family that takes super good care of my property. Of course, I’m no dummy… time that $475 check doesn’t clear when it’s suppose to and the eviction process will start. So far tho, every time they’ve said they were going to do something, they did it.

I’d like to hear what Shae and other landlords think. Have you ever changed the due date for a tenant? Or made any type of special arrangement for them for whatever reason?

Btw, Scott, I think you have a very valid point, fyi. I’m just in a position where I know the eviction process in my state (not that long) and I know that I don’t have any problems evicting someone when they don’t live up to their end of the payment bargain (fwiw, I’ve evicted EVERY tenant I’ve ever had in my 11 years of being a landlord. No lie. So one more wouldn’t make a difference to me, but I really do think this family is a good, honest, hard-working family….they just aren’t the best budgeters…like a lot of families in the world lol)

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