The man that manages my properties is also my boss. He charges flat 8% for all rent collected, so he makes nothing if my tenants don’t pay. He does get a fee for tenant placement, but he is a broker so the money he makes is not something that any other broker would not make in getting a place rented: Typical fee is one month’s rent, but the majority of that goes to the agents involved and he puts in quite a bit of time himself making sure the right people get in the unit.
He does keep any Late Fees charged (typical for the area), however he also often does what one poster suggested and covers the unpaid rent out of his pocket, reimbursing himself when the tenant pays. He does not count on the Late Fees as extra income and never cares one way or the amount of money late payments bring in. If he didn’t get that money any more he wouldn’t care one way or the other, BUT it would be a nightmare for me. Majority of my job is dealing with tenants to bring in the rent and Late Fees are one of my big bargaining chips. I work with the tenants to make sure the money comes in and being able to waive or lower the fees lets them know I am being fair. If that money had to go to the owners I would have no choice but to enforce them fully.
Not only that, you have to realize the tenants don’t always willingly or immediately pay the Late Fee. Out leases here normally state that any money they pay goes first outstanding fees or charges and then to rent; therefore, when they don’t give extra to cover the Late Fee it means they are not paying the full rent. We would be posting notices left and right for nominal amounts of money, which would really tick off the tenants!
This all said, the most important point is that he manages my properties because I trust him. If you question the actions or motives of the person in charge of your investment then you either have to have a sit down with them or you must move on to someone else.