Today, we are experiencing considerably more financing requirements than the past, and lenders are learning to actually use metrics to gage a person's ability to service debt and the underlying collateral, rather than simply originate, recycling the loan, then walk away. 100% financing to individuals w/ 600 FICOs is laughable these days, but was a reality in the past.

You are at more risk of issues with this tenant for imposing a late fee when the ability to do so is unclear. 

Higher rates tend to affect impact people's ability to service debt and therefore pay high prices for housing.

Your ability to "reload" for the next investment will largely be dictate by W2 and lifestyle.  

specifically we have a 6 unit that has water and sewer as the largest expense (and increasing significantly) so our thought was instead of increasing rent we would begin a bill back.  

If you don't have the cash or the ability to get a traditional loan, you may have to use creative financing or partnerships.

@Kenneth Garrett - One of the beauties of rental properties is the ability to generate PASSIVE income.

That'll leave it in their mind that they can say goodbye to the $800-ish deposit if they choose to smoke inside, plus get a bill.

Mistakes are proof you do not have the ability to learn from the mistakes of others.The least expensive education one can get is learning from the mistakes of others. 

I know this doesn't happen often, but it definitely built my confidence that I have the ability to pick a winner, now the construction begins!