Rent money trickling in. What to do?

[Vincent Plant]

I have a young family in my property renting it out currently. It’s a low income home so I don’t expect them to be perfect however I see now that collecting the rent is slowly becoming an issue each month. In the past she was paying it half on the 15th, the rest on the last day. Then I noticed she would send it all on the last day. Then she would send it in the 5 day grace period, and now she sent $900 out of $1,150 and said the rest will be late because things are tight. In our lease we have a $125 late fee if it’s late but I’m worried that imposing that fee will cause them to fall even further behind. How would you handle this? Do you come off as understanding and say this is your one free pass to be late, or put your foot down and slam them with the fee? This is the first time they are officially late on he rent, but we are only about 5 months into the lease.

[Marcia Maynard]

What does your rental agreement say? Enforce it. 

Be aware that legal action, vacancy, and turnover cost will set you back a significant amount and being homeless is a dire consequence, so you both have motivation to make this work.

For us, rent is due on the first and late on the second. If it isn't received or postmarked by the fifth, we charge a $50 late fee. We send a "Rent Past Due" letter that explains in clear terms what we expect the tenant to do and what the consequences are for not following the terms of the rental agreement. If the tenant hasn't paid by the 15th of the month, they will be in trouble, as the next month's rent will soon be due. It then becomes an endless struggle. A perpetual game of catch up.

At this juncture, I would recommend you sit down with your tenant and review the terms of the rental agreement. If a tenant can't pay the rent when it's due, then they can't afford to live in the property and it's best to talk with them about a move-out plan. You will be amazed at how suddenly payment of rent becomes more important than buying new shoes or paying for a new transmission for their GMC. The tenant needs to set their priorities right. You have allowed them to stray. Time to right the ship.

We rent to folks on fixed income who need affordable housing.... the low income sector.  We don't expect any less of them than we do of those with higher income. But we do make our rental agreement clear and reasonable for all. I think a $125 late fee is onerous for low income properties. I can see you're reluctant to collect it and you fear the tenant can't afford it. So what use is it?

Find out the root cause of the tenant behavior. Are they unable or unwilling to pay the rent on time.  What would it take for the tenant to turn this around? Does the tenant receive sufficient income to afford to rent your place? Does the tenant receive their income monthly, biweekly, or weekly? From one source or from two or more? By direct deposit or another way?

Be open and honest with the tenant. Obviously, the status quo is not working for you. Find the moxie within you to take action. Hope this helps!