Rent due on the 15th?

Question

The mortgage is due on the 1st. I'd like to have the rent due on the 15th. While I do have funds set aside to pay the mortgage in the event that rent is late, I like the little safety net of not having it all due at the same time. Is this not the norm? Would a potential tenant question it?

Jon Holdman · Answer

IMHO your ability to make the mortgage payment should NOT depend on getting the rent check from the tenant.  Because you will at some point have a tenant disappear without paying.  Or just move out as the normal course of things.  Or refuse to pay and force you to evict, possibly costing you a month or two or more in lost rents plus the legal fees.  If your ability to pay depends on getting the rent on time, you're doomed.

If you make the rent due on the 15th, its going to cover the 15th of one month to the 14th of the next.  I assume you don't mean you would try to get tenants to pay two weeks early.  That will never fly.

I do agree with Tom Goans here.  I'll work with a tenant to find an acceptable date.  When they move in, they always have to pay the full security deposit and one full month's rent, in cash or money order.  Then, on the next due date, they may have a prorated partial month to get in synch.  For instance, if they move in on the 15th, and rent is due on the 1st, they would pay one months rent to move in.  Then, on the first, they would only we a half a month because they have already paid for half.  If you don't do that, you'll get someone in on the 25th who pays you a weeks rent and the forces you through a lengthy eviction.

Lyndsey Keller · Answer

Thanks! I think I'll stick with the 1st of the month now.

Jon Holdman, thanks for explaining how you prorate rent when first starting out.

Tom Goans · Answer

Great thoughts Jon.

I try to always work to the tenant's or borrower's advantage believeing this helps them to become better payers.

Many times I offer to split the payment over the month to match when they receive their paychecks. It seems easier for them to make a $250 payment every week vs. $1,000.00 per month. If it is easier for them, I am happy along with them. I am a friendly landlord in their eyes.

Here is an added benefit for me that you, Jon, remined me of; collecting multiple payments during the month allows me to be alerted of a problem sooner. Thus, before it becomes a major issue, I have an opportunity to work with the people. Once again, everyone wins.

I also will change the due dates with a simple email request. Again, I want people to be comfortable and very happy to pay me.

Tom Goans · Answer

Respectively, I disagree with the having the rent due on the first. This is not a rule or law. It could be considered a mistake and a contributor to slow payments.

For years, I have always let my borrowers and tenants select the due date. They know when all the bills they have are due. Many, if not most, are due on the first. Thus, making it more difficult on them.

The solution is to work with them. Everyone wins. Life is easier on the payer and you get your payments when they are due.

As for the grace period, nearly all legal documents state “due on or before”. This is the due date. The following day, the payment is delinquent. The late fee is a flexible date.

If you train your tenants or borrowers there is a grace period, they will always work within the grace period. If you instruct them the payment is due on the due date as stated in the contract, they will be better at paying by the due date.

One word of caution, some judges look at the payment history and your lack of structure when settling disputes.

Vijaianand Thirunageswaram · Answer

It is always recommended to have the rent due on 1st and grace period till 3rd. That's what apartments do. If you tenant comes from apartment, they will tough time paying. Also beginning of the month people always have funds instead of mid month.

James H. · Answer

Who cares if the due dates are close to each other if you have sufficient reserves? The rent payment and the mortgage payment should be completely independent of each other, financially, mentally and emotionally.

For example, on my mortgaged rental, I pay my mortage on a  biweekly schedule - autodraft. The tenants still pay once a month (due on the 1st). Mortgage payments and rent payments use the same account. There is enough reserves to cover the mortage in the event of several missed rent payments and there is enough cashflow in the property that the account is continually building higher reserves despite the mismatched due dates.

You are trying to create problems with your tenants by imposing non-standard due dates in my opinion.

William Brace · Answer

Lyndsey Keller  this is just my opinion but lets assume you changed your leases for rent to be due on the 15th. You may feel safer for that first month but after that first month rent is still due once per month so the day it is due is an arbitrary number in my book. You should already have your 6 month reserves set aside to be safe anyway, so I don't see having rent due in the middle of the month as really changing anything. I think it's all about discipline.

Another way to look at it is some people are paid by their day job weekly, some every two weeks and some once a month. At the end of the day the pay is the same. So if you budget accordingly you will never notice a difference at the end of the month.

Ravi Rai · Answer

I have my rent due by 5th and mortgage due by 15th (you can schedule it). I like having some time before mortgage is due.

Rent due on the 15th?

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