What percentage of your tenants are late with the rent?

[Travis Beehler]

Just curious, for those of you who have multiple rentals, what rough percentage of your tenants are late with the rent?  It doesn't have to be one particular individual, just curious about overall, what could I ballpark expect month to month?  Thanks!

Travis

[Marcia Maynard]

Hey Travis! We're in the same town! We have 15 units occupied and one new property that we're getting ready to rent. 15 tenants x 12 months = 180 payments per year. Of those, at least 50% come in on or before the 1st, about 50% come in by the 5th which is the grace period allowed to avoid a late fee. So I guess that is a pretty good track record! 

Here's some background that may be helpful for you to consider.

Most of our tenants are long term and we use MTM rental agreements. We have B and C properties and our niche is affordable housing for low income/fixed income folks. We teach our tenants... "Don't be late, mail by the 28th!" We also encourage those with bank accounts to set up auto pay with their bank. We don't send out rent reminders. 

Tenants who pay on or before the 1st get a star in our rent register. Our "all-stars" receive special benefits such as having their unit upgraded first when we do upgrades, special requests are more often accommodated, and occasionally we give them a special thank you gift. But most of all, no matter what a person's age... 5, 10, 15, 25, 40, 60, or 80... it seems people like to get a star for good performance and take pride in that!

We collect our rents at a P.O. box and then take them three blocks to our credit union. Most of the tenant checks/money orders are in the P.O. box when we check them on the first, those are the ones that pay in advance. The rest are usually there on the third when I make another pick-up. A few will come in during the grace period, which if paid the 2nd - 5th are still technically late, but won't incur a late fee. One of our tenants gets his social security check on the third, so if he pays on the third we don't consider him late.

If a tenant is late, we contact them right away, let them know we did not receive the rent and inquire when we can expect to see it. We give tenants Rent Past Due letters on the 6th and charge the late fee at that time. The Rent Past Due letter explains what they must do to continue to live in the unit they occupy. If they don't pay in a timely manner, we post notice to Pay Rent or Quit on the 8th, unless we have made other arrangements with the tenant for getting their rent. There is an additional $20 fee if we post a notice for non-compliance with any term of our rental agreement.

Out of 15 tenants there is one that gets a late charge about twice a year, and pays rent only one or two days past the 5th. The late fee is our compensation for our tolerance and extra effort. That tenant has been with us for 14 years! One thing to note, she is the only tenant on an older contract that has a $10 late fee. (We're planning on changing that, but just did a rent raise so now is not the time.) The others are on our newer contract that has a $50 late fee. The ones with the $50 late fee rarely if ever are late past the 5th. Our tenants tend to stay long term, one even at 26 years and counting.

We never let rent go unpaid past the mid-month mark. As a courtesy we waive the late fee the first time or for extenuating circumstances. However if the tenant is not performing, we will be swift, firm, fair and polite, but will come down on them with legal notices to Pay Rent or Quit and/or a Notice to Perform. In 20 years we have only had to do three evictions. All three tenants were failing to pay rent and violating the rental agreement in other ways. We evicted for failure to pay rent since it is much quicker and easier to do. Evictions in our jurisdiction take less than 30 days, so there is great incentive for tenants to pay their rent! 

Your management style plays a key role as most people respond better when treated with respect and fairness. Your rental agreement and enforcement of it will determine if they pay on time.