Split Rent payment to accomodate Tenant pay schedule?

Question

Hello.

I am 4 months into my first stint as landlord and need a little advice. Tenant has requested to pay 3/4 of the rent before the 1st and the remainder by the 7th of March due to his paycheck schedule. My contract assesses a late fee if rent is not paid by the 6th of the month.

Should I accomodate him?

So far, he has been on time or early on rent every month. I am inclined to do it but does this show too much leniency?

Thank you for sharing your thoughts, advice, and experience.

_Carrie Westover

Joel Owens · Answer

If this is not a stand alone house but an apartment building it gets worse as the tenant talks to others. Give them an inch and they take a mile. There are cash advance places that give you money early for your check. You just want their rent on time.

If the insist on this then you might want to modify your lease. Explain that multiple payments leads to more accounting and bookkeeping costs and collection procedures and throws everything off. So with split payments the amount of rent paid per month will have to go up. You want to make it painful for them for you to go along with their plan. If they are testing you they will not want to do it. If they truly need a split payment they will pay the extra money.

No legal advice.

Michele Fischer · Answer

I would entertain this if it is a lower income property, especially to get so much still on the first.  I would calculate how much in late fees they would pay if they paid that schedule, cut the amount in half, and add that to the second payment as the new modified rent amount.  Meet them in the middle.

If tenants stay ahead of the amount they owe for the prorated days (50% paid by the 15th, for example) and we are earning late fees, we don't get too worked up about it.  But we do follow-up as soon as they fall behind the modified agreement.

We willingly chose this low income roller coaster; tenants who have their act together don't want to live in our units.  I think it's better to work with existing tenants if they are otherwise good.

Chris K. · Answer

No don't waive the late fee or change the terms of the lease. If he needs to pay late then he needs to cough up the late fee or if he doesn't want to pay the late fee then he needs to come up with a solution on his own.

Eric Y. · Answer

You don't want to get into this mess. One of my very first multi-fams had a tenant who originally asked if he could pay on the 10th of every month instead of the 1st. Being too green at the time, I made a verbal agreement with him. Guess who ended up being my only problem tenant?

That was my first "lesson learning" tenant. After that, no excuses. If they can't budget their money properly enough to float rent for a handful of days between paychecks, they're probably bound to miss it soon enough. They're just trying to delay the inevitable by a few months and feel you out.

Kevin Brown · Answer

I had a tenant ask to do something similar last year. I allowed him to pay in 2 installments, but charges an extra $200/ month. The way I saw it was, if hes not going to be able to pay, I will evict him regardless so it was worth a shot for a few months to not have to evict, and make a little extra money. For what its worth, this system lasted about 3 months before he couldn't pay anymore and he left.

Michael Lauther · Answer

@Carrie Westover my view on this depends greatly on the market your property is in. If it is a typical low income blue color area where most people are living paycheck to paycheck then expect anyone who rents in that area will be living paycheck to paycheck. Your rent and ROI should reflect this risk. It is not uncommon for tenants to pay rent week to week in my area but if I accept this arrangement it would be at a significant increase in the overall rent per year.  If this tenant is a decent one, meaning he is taking good care of the property has a good work history , I would consider a split rent arrangement  but would modify the lease to reflect this. You already have a contractual arrangement to handle this situation but if that is going to lose you an otherwise good tenant I would make the modification.

I will add if this is not a low income area and you have ended up with a tenant who will not be able to afford the rent perhaps you need to let the situation play out as per your current contract. Charge the late fee.

Account Closed · Answer

behind the business aspect of being a landlord , is being a human being. will it put you out to get the full payment on the seventh? is he worth penalizing over it? how easy is he to replace with another tenant if he cant handle it? how much will that cost? how good will that tenant be relative to him? worth the risk?.......never forget the value that good will gets you with tenants/judges/courts etc.....document the arrangement, perhaps use it as leverage to get something you want from him??? aka reduce days to file rent notice in lease if he doesnt pay, make him responsible for broken appliances in his unit, etc.

Aly W. · Answer

I agree with @Michele Fischer, as I have 2 SFRs in a low/no income area. One tenant has been late more than half a dozen times in almost 2 years, a week at most, and always pays the late fees. Good tenants in this area are extremely hard to find, and vacancies invite pipe theft; I'm more than willing to work with her and have never served her a Pay or Quit. If things really get out of hand, I might. Tolerance for timely rent payment is based on the difficulty or ease in finding a better tenant. You know your market best.

Gerald K. · Answer

I understand the reason for trying to make this work out. Before going forward with it, I would contact a lawyer familiar with evictions. The problem with receiving payments at different times is it complicates things if the tenant is late with rent. For example, if you're on a month to month agreement and decide to terminate the tenancy, when is the beginning and when is the end of the rental period? Are there two rental periods within a month? If you serve a lawful notice to terminate or evict, then received the other part of the month's payment, does that renew the tenancy and cancel the lawful notice? These are things that need to be worked out before going down this path. The other part that gets confusing is late fees. When do they start? What happens if both the first and the second payment within the month have not been paid? Are there late fees associated with each installment? How does that work? I would really not want to deal with that. If you collect rent in person or at a remote location, or have to handle depositing checks at two different times, you've just increased the amount of work you would normally have to do. If the tenant is late with rent often, you may have twice as much work following up on getting paid. All things to consider.

Split Rent payment to accomodate Tenant pay schedule?

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