Tenant always pays late, but takes excellent care of property

[Scott J.]

I have a SF rental with tenants that have been there for about a year and a half. It is a very nice family who takes absolutely immaculate care of the property. The carpet still looks brand new! 

The problem is that it's more rent than they can afford. They always pay, but it is a week or two late every single time. They said changing the due date from the first to the 15th would help, which we did... but nope, still always late. 

I've made it clear this isn't okay, but the fact is they're living paycheck to paycheck and it's hard for them to pay on time--whenever that may be. 

They rented their previous place for five years and I love the opportunity for a long-term tenant, but I'm tired of the stress of never knowing when we'll get paid. Their lease is up in August and I'm thinking of increasing their rent from $1,850 to $1,900 (the market rate) and calling and nudging them toward something more affordable elsewhere. Then I could dangle the carrot of giving them their deposit back promptly, bla bla. 

It's great having clean renters that may stay for years but always getting rent late sucks. More importantly, moving them out now may avoid an eviction situation later if they just can't pay at some point. 

How would you handle this?

[Michael Hayworth]

A structural solution may fix your problem.

(Almost) all my tenants pay via ACH autodraft. That's just a requirement of leasing one of my houses. I don't want to chase money. Problem is, if they bounce one, it takes about 3 days before you know that an ACH has bounced.

Had a tenant I really liked who bounced about 1 out of 3 payments. She was right on the edge of being able to afford the place, and sometimes didn't manage her money well. 

She got paid bi-weekly, so we changed her autodraft to bi-weekly so that we'd draft her account on payday. Her money went in via direct deposit, and her rent went right back out via ACH. She didn't really have a chance to spend it on anything else.

Breaking it up into smaller payments on payday vs. one larger payment each month solved my problem. Might solve yours.