Late Fee policies

[Brandon Ja]

Good morning everyone.  New to rentals and it’s been 20 years since I have rented a place myself.  Looking for ideas on how to structure my late fees and what you charge.  Do most people charge a set amount or is it better to go with a percentage of the rent?  Do the fees add up daily or do you use a different rate?  Any adivice would be appreciated.  Thanks in advance.

[Stuart Udis]

There will likely be local regulations that will dictate the maximum late fee that can be charged. Even if I have late fees in my leases, I rarely apply them. All of my properties are A/B locations with responsible tenants who make their payments through an online payment system. Never have to chase tenants for rent. Never have rent collections that drag more than a few weeks. In fact it’s not even necessary to send reminders. Rent collection is an auto pilot part of my business. Even if I were to collect the late fees it doest’t materially alter my properties performance and my tenants appreciate the flexibility in the very rare circumstances where they are late. In return my tenants treat me and my properties very well, stay longer and refer friends. 

 It’s usually the C/D property investors who are sensitive to late fees because they are often times running  business rather than investing in real estate where they have to nickel and dime the tenants to generate revenues. Perhaps my take is the unpopular take but that’s my personal feeling.