Consistent Late Payments but keeping Tenant - stupid?

Question

1 of my 6 units in a lower-income neighborhood is late consistently, every month. I have accepted it so far, w/ late fee, for over 6 months. And so far, plan to continue doing so (but adding a daily late fee). However, I have repeatedly seen advice on these forums about evicting someone immediately when they don't pay.

Am I crazy? And this is going to end with a big eviction fight and losses at some point?

Or does the $600+ I'm going to collect over a 12mo period, coupled with the 1.5mo security deposit, adequately compensate me for that risk?.. relative to the cost of turnover and unknowns associated with the next tenant?

Pays about 2/3 by 5th (last day before late fee). Remainder + $50 late fee by the next Friday.

Neighborhood: Lower-income in SF Bay
	Security Deposit: 1.5mo rent
	Rent: Fair, but higher side of market b/c nicer condition
	Hassle Factor: Little. Rarely calls for any repairs or asks for anything. Doesn't bother other tenants. Friendly. Always pays $50 late fee without question, b/c he knows I will always enforce it.

Unit Condition: They take care of the unit. My handyman takes a look every few months, and it is in expected condition.

I have accepted it so far because of the reasons above. 1.5mo security deposit allows me an additional 1/2 month of time before eviction start, and still be starting w/ 1mo deposit (w/ .5 going towards unpaid rent for that half month while I was waiting without filing). The tenants are low-maintenance, and the rents are good. (To be honest I don't mind the extra $600 this year either.. Will pay for half my plane ticket to Asia!) I would estimate they are about average as far as tenants go in this lower-income area. And predictable and consistent in the amount and timing of late payments (so at least it's a known.)

Steve Babiak · Answer

One foreclosure that I bought at sheriff sale had this book title at bedside for reading - "A Day Late and a Dollar Short"; seems like that borrower could have written the sequel called "Waaayyy More Than a Day Late and Waaayyy More Than a Dollar Short" :)

Account Closed · Answer

You have received a lot of great advice above. I have nothing to add.

It's my personal opinion that we have been much more fortunate than others so a little leniency wouldn't hurt. Some people are really struggling out there.

Rob K. · Answer

I make hundreds every month in late fees. Some people are just stupid and will always be a day late and a dollar short.

One thing you can do if you don't care whether they stay or go is raise the rent AND keep collecting late fees. They probably won't be able to move as they'll never be able to come up with another security deposit.

Joel Owens · Answer

You are looking for the tenant to do the same thing every time. If they want to pay more money for spreading out the rent and do it every month consistently then it's not that bad.

If it's in an apartment building versus a house the risk is the word will spread to al other tenants and they will start pushing boundaries.

Kevin Young · Answer

J. Martin i've have crossed this bridged too … through my trial and error, i draw a firm line at the point a person doesn't do what they say.  e.g., if they say i'll get you $ next friday and don't, then evict. don't give a second chance … I've been strung along, and burned.

additionally, if i need to chase them down, then I draw a line.  IOWs, i'll happily collect a late fee if its hassle free.

i found a direct correlation between credit score and ones ability to pay on time … no surprise, the one person i needed to evict was the one (and only) exception i made to my rule.

Ben Skove · Answer

The tipping point for me would be whether they try to push it into the next month. Given that they know you're holding the line with the late fee - and hopefully with other lease matters - they're less likely to do so.

Is it an issue of when they're paid? I've moved due dates to coincide with pay days to solve consistent late pays.

Rolanda Eldridge · Answer

J. Martin ..Similar tenant..Been with me 3 years..Rent $700 lc $70.  The place is well kept.  A yard man cuts the grass...No mortgage, so no plans to evict.  Each property performs differently, but as long as it performing, I'm o.k....Of course, I wouldn't be in business long if all performed this way....

Marie Swenson · Answer

Late fee=extra income! Unless you have a mortgage and rely on a timely rent to pay your mortgage... then don't deal with the struggle of eviction!

Christopher Roy · Answer

As long as there is a pattern. If the tenant is paying most of the rent by the due date and then the next week (following paycheck) paying the remaining balance plus the late fee, I wouldn't evict them. I would rather collect the late charge and have a tenant in there who is taking care of the place versus months of vacancy and possible horror tenants. Just my two cents

Jessica Yau · Answer

I love late fees! As long as they are paying them I say accept it. Plus you have the deposit. You are basically getting $50 extra on your rent.