What is your Late fee structure?

[Todd Groom]

Every time we buy a new multi-family property we inherit the exhausting leases (we do not believe in evicting tenants just because we purchased the property and are against it). Each owner seems to always have their own late fee system in place. We have yet to ever see the same system. So just wondering what system you use and why?

Our current system is a mix of everything. Rent is due by the 5th day at 11:59pm. As of the 6th day they are charged a $50 fee. Each day that it is not paid an additional $15 fee is charged indefinitely until rent is paid. The reason we chose this method is it pushes the tenant to get the rent paid as soon as possible. We used to charge a flat fee of $75 but found once the fee is there tenants don’t care. They already know it’s in the past so no sense paying.

The other rents we have seen were, flat fee $100 as of 6th, A flat 10% fee, flat 5% fee and one where tenants were charged $50 on the 3rd then $20 a day after the 5th.

What’s you’re late fee structure?