My first low income property (Newark, NJ)

[Moises Mari]

Hello Everyone,

This is my first question on BiggerPockets, so here it goes, please share your opinions and/or ideas/suggestions, thank you in advance! I'm a 30 year old investor in the northeast side of NJ. I'm not a seasoned investor, however, in the past year I have managed to acquire 5 units. Having invested in other cities outside of Newark, I decided to give Newark, NJ a try. 

For those that do not know anything about Newark, NJ. Newark is a class C-F area. Approximately 1 month ago I purchase a 3 unit property, May 15th to be exact, with that property I inherited 2 tenants as the owner used to live on the first floor. One tenants is on partial section 8 and the other tenant pays rent on her own. This was a great deal for the area, everything was great until June 10th came which according to the old lease is when the month rent grace period ends. Being my first time investing in Newark, NJ I decided to open a P.O. Box for tenants to send their payments. 

June 10th came and went and I received no payments from either tenants, even after having notified them of their requirement to send the payments to that P.O. Box by that date, June 10th.

I went ahead and called both tenants.

Tenant #1 - Who IS NOT on section 8 told me she was requesting assistance from the city for her rent and that she would receive a response by the end of this week, approx. June 17th. Therefore, she was waiting for a response, and until then I would not receive any payment. I told her, her rent is due by the 10th of the month, I would be filing for eviction. I explained that if she pays for the rents before the court day I would require the late fee and we should be back to normal.  I'm in the process of reviewing the old landlords rental agreement and placing a new paragraphs which has incremental late fees as the days progress. Meaning, rent is due by the 10th, if is not in by then then a late fee of $50, anything after that there will be a fee of $25 per day until rent and fees are paid in full.

Questions for tenant #1 are the following:

1) Has anyone place such late fee statement on their own leases? If you can share the verbiage, I would greatly appreciate it.

2) Should I have told her that if she pays her rent and the late fee, then we would be back to normal? I don't want her to make a habit of this every month.

Tenant #2 - This tenant IS ON Section 8. Section 8 as most known is the best at paying on time, so they ended up paying on June 2nd, however, as with the first tenant June 10th came and there was no payment on my P.O. Box for the tenants portion of the payment. I call the tenant as well and she told me she had mailed the payment on the 10th and that she apologized it was late. I trying to be nice and not being familiar with dealing with a P.O. Box, and when to expect to receive the payments, told her it was ok, that I would assume it would arrive no later than 5 days, I checked the P.O. Box and again, no payment. I called her yesterday and notified her of this, she apologized again, she told me to look for the payment as she did send it, and asked me to apply any late fees necessary. I will wait until Friday, check the P.O. Box again, and then file for eviction on both tenants Friday afternoon, WELCOME TO NEWARK, I know =) 

Questions for tenant #2 are the following:

1) How do you deal with mailed payments, should they be arriving on my P.O. on the 10th, since that is when the grace period ends, should I be charging a late fee if the payment is not there by the 10th? How do you guys deal with your mailed payments. I try to be flexible sometime because I know that the USPS can delay things sometimes.

The first floor which is vacant, I'm repairing and hoping to rent by the end of this month. Any suggestion on Newark tenant screening would be also greatly appreciated as I would prefer to not run into more issues with the 3rd future tenant!!! As Newark, as I'm noticing is a whole different ball game. Cheers.

Thank you all!