Staggered Rent Due Dates

[Jeremy Seely]

I recently inherited some multifamily property and the longtime property manager has leases set up with many different due dates. About half are due on the 1st, some on the 15th, some in the 20s, etc. The main reasoning behind this is that many of the tenants are in various situations (govt. payments, etc) where they only get paid once a month somewhere in the middle of the month.

Looking back at the past year of bank statements it appears that all the scheduled rent is being collected, no payments are being missed (and when they are, they get evicted in a timely manner). So it seems like this arrangement works out fine for the property manager. He doesn't complain about it, although it seems like insanity to me, having to constantly be thinking about which rents are due every week of the month.

Part of me thinks if it ain't broke don't fix it--it seems to be fine with PM and the rent is all being collected--but another part thinks it's terribly inefficient. There's an interesting discussion that touches on this topic at Why is Rent Due on the First of the Month? Does anybody else have experience with this kind of setup, and how does/did it work for you?

[Bill Gulley]

What this really boils down to is the tenant's ability to manage their money. 

Any decent accounting system will have an accounts receivable section, these accounts can come due on any date and the terms can be entered such as 5/15 and interest or penalties are automatically applied.   There really is no issue from an automated standpoint.

I set up rents according to paydays, they paid a security deposit and 1 month + odd days rent to the next due date, then monthly rents. 

You really need to know your target market, where are they generally as to income levels, types of employment, age and education......simple demographics. 

People can qualify but they can easily be living paycheck to paycheck, most fall into this category.

Most can't deal with a financial emergency, if they have to go to the emergency room with a little one, they just had to spend part of their rent money. Stuff happens!

The goal of any debt collector is to be first in line when money is there to pay.

It's just good business to take your rents on or very close to a payday, the less time your tenant is in control of that money the less risk you have in collecting it. 

If tenants were great money managers, had sufficient savings, good steady employment, many wouldn't be a tenant. If you attempt to narrow your tenant base to these types, you will limit your market and reduce the marketability of your rentals, everyone would like the cream of the crops of tenants, but your properties will have a lot to do with that.

As to teaching your tenants, I agree that you need rules and at times carry a big stick, but pick you battles carefully. Are you really going to teach a new tenant about their money management skills in the first 3 or 6 months? Probably not. 

When a tenant gets paid and you take that rent, you are forcing them to modify their money skills, that's what they have left to work with, so they will learn or be short at the end of a pay period.....hey, you just avoided that risk !

Administration issues? Really, my cell phone has an appointment list to the day, even an alarm to remind me. You're saying that if Joe's rent is due on the 17th, you can't keep track of that? 

Your organizational skills might be in question, the way I look at it, any additional effort is simply paid to reduce collection issues, vacancies, move outs, clean ups and advertising, not to mention the extra time in showings, processing new tenants and starting over. It's a small price to pay to work with a tenant. 

Some in this thread may not have 5 rentals, I doubt anyone has 50, in contrast I collected over a thousand notes, with one accountant, payments were due on every date! I just can't hear the crying, not when you're getting money!

If your PM doesn't have an issue with the payment dates, it must mean they are organized and probably more efficient than you know or think. The ability to manage will be evidenced by your vacancy rate. The most efficient method will be that which collects accounts in a timely manner, that may not have anything to do with the first of any month. 

For small operators, you may have similar problems with cash flow, are your mortgage payments all lined up on the first? Mine weren't. Cash flow, from an operational stand point it's nice to have money rolling in everyday or every few days, it doesn't pinch your budget as hard as a small operator.

So, Mrs. Tenant, your social security check comes in on the 17th, great, we'll set your rents up to be due on the 19th, just in case you get a late check. Since we are making this accommodation please sign this auto draft for your checking account and you won't have to worry about sending in payments and you can move in!  :)