Thank you, all, for sharing and will give more info since you've been so generous.

So, I suggest you send them a notice that you have been overly generous in accepting late rent in the past, but starting July 1st, you will no longer accept late rent, and that all past due rent must also be paid up by that date.If your contract gives them 5 days grace period, say something like, "If rent is not paid by the 5th of the month, late fees will begin accruing and the eviction process will begin."

You have the problem of an Oral discussion vs Oral contract vs a written contract.This is a sad case as both of you made mistakes; you orally made a suggestive remark which he took as a promise.IMO, you ought to pay him for his time+effort and refuse the rent change.You better start documenting who said/did what when, make the good will gesture, and try to stay out of Small Claims.

It is a small gesture, but can be quite meaningful to tenants.

Hoping the goodwill gesture of not increasing the rental rate as previously planned convinces them to stay longer than 6 months.Good luck to you in this business!

@Tina Tarkington, I really like the idea of making a nice gesture to your tenants around the holidays.

I thought my nice gesture would pay off, but I'm starting to doubt it. 

Generally, I am generous to tenants when calculating the deductions to their deposit. 

But by the time we got through inspections and went to underwriting, the program had changed and the DSCR requirement was much more generous, so I could have bought it for $109,900 after all.

Also just want to thank all Bp members for being so generous and inspiring!