All Forum Posts by: Travis Beehler

I had just closed on my 9th property (using conventional financing) earlier in the month when I gave my notice.  I closed on my 10th in April, before I was officially gone.  Then I acquired 2 more last year after I had left.

Hey Travis! We're in the same town! We have 15 units occupied and one new property that we're getting ready to rent. 15 tenants x 12 months = 180 payments per year. Of those, at least 50% come in on or before the 1st, about 50% come in by the 5th which is the grace period allowed to avoid a late fee. So I guess that is a pretty good track record! 

Here's some background that may be helpful for you to consider.

Most of our tenants are long term and we use MTM rental agreements. We have B and C properties and our niche is affordable housing for low income/fixed income folks. We teach our tenants... "Don't be late, mail by the 28th!" We also encourage those with bank accounts to set up auto pay with their bank. We don't send out rent reminders. 

Tenants who pay on or before the 1st get a star in our rent register. Our "all-stars" receive special benefits such as having their unit upgraded first when we do upgrades, special requests are more often accommodated, and occasionally we give them a special thank you gift. But most of all, no matter what a person's age... 5, 10, 15, 25, 40, 60, or 80... it seems people like to get a star for good performance and take pride in that!

We collect our rents at a P.O. box and then take them three blocks to our credit union. Most of the tenant checks/money orders are in the P.O. box when we check them on the first, those are the ones that pay in advance. The rest are usually there on the third when I make another pick-up. A few will come in during the grace period, which if paid the 2nd - 5th are still technically late, but won't incur a late fee. One of our tenants gets his social security check on the third, so if he pays on the third we don't consider him late.

If a tenant is late, we contact them right away, let them know we did not receive the rent and inquire when we can expect to see it. We give tenants Rent Past Due letters on the 6th and charge the late fee at that time. The Rent Past Due letter explains what they must do to continue to live in the unit they occupy. If they don't pay in a timely manner, we post notice to Pay Rent or Quit on the 8th, unless we have made other arrangements with the tenant for getting their rent. There is an additional $20 fee if we post a notice for non-compliance with any term of our rental agreement.

Out of 15 tenants there is one that gets a late charge about twice a year, and pays rent only one or two days past the 5th. The late fee is our compensation for our tolerance and extra effort. That tenant has been with us for 14 years! One thing to note, she is the only tenant on an older contract that has a $10 late fee. (We're planning on changing that, but just did a rent raise so now is not the time.) The others are on our newer contract that has a $50 late fee. The ones with the $50 late fee rarely if ever are late past the 5th. Our tenants tend to stay long term, one even at 26 years and counting.

We never let rent go unpaid past the mid-month mark. As a courtesy we waive the late fee the first time or for extenuating circumstances. However if the tenant is not performing, we will be swift, firm, fair and polite, but will come down on them with legal notices to Pay Rent or Quit and/or a Notice to Perform. In 20 years we have only had to do three evictions. All three tenants were failing to pay rent and violating the rental agreement in other ways. We evicted for failure to pay rent since it is much quicker and easier to do. Evictions in our jurisdiction take less than 30 days, so there is great incentive for tenants to pay their rent! 

Your management style plays a key role as most people respond better when treated with respect and fairness. Your rental agreement and enforcement of it will determine if they pay on time.

I managed a 26 unit apartment building, and when I first took it over as the resident manager (so I rented out 25 units), I'd say about 5 or 6 would pay late - so around 20%.  Once I got rid of the deadbeats I inherited (part of my job was to get rid of the deadbeats and collect back rent due), I'd say that went down to around 3, so 12%.

But, then what I did, was I'd send a mass text to anyone who hadn't paid me by the 4th - they had a grace period until the 5th, rent is late on the 6th.  And voila! I didn't have late payments after that, except very rarely, and usually it would be a couple times a year with students waiting on their next financial aid payment.

So, if you get rid of deadbeats, and go ahead and send some type of reminder, it will really cut down the late payments, in my experience.

I really resisted reminding people to pay their rent at first, thinking I shouldn't have to be their mommy.  But, the bottom line was that it was a lot more work for me to deal with late payments and additional bank deposits, etc., etc.  It ended up being easier on me to send a reminder text every month.  And yes, some depended on it, but several thanked me for doing it :-)

Oh, and I'd tell tenants they get "one free pass" where they didn't have to pay a late fee, and we agreed on a date the rent would be due.  After their one free pass, they'd have to pay a late fee if they were late again.  Although, I do admit that I waived this for the students relying on financial aid that was late, and they could show me the financial aid letter or get the financial aid dept to send me an email saying the payment was late, but was coming.