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Late Rental Payments

February 23, 2012 | Comments: 0 | Views: 126

I'm not sure why anyone would let tenants get behind in their payments, but I regularly get calls from students asking what they should do because it's the 21st of the month and they still haven't received the payment that was due on the first. "Why haven't you done anything sooner?" I ask. "Well, they said they were going to pay."

What other creditor does that line work with? The mortgage company? The gas company? Cable? Where do people learn this tactic? Apparently, with landlords who let them slide rather than responding as soon as the payment is late.

We have a set policy and we stick to it. Payments are due on the first and late after the fifth. In my world, payments are late after the first but the government, in their wisdom, decided that tenants should have five additional days to come up with their payment, so I have to wait until the sixth to respond to non-pays.

That doesn't help anyone, as far as I can tell. Because of this, tenants don't think their rent is due until the fifth and wonder why I'm upset when they want to pay after that. "I'm not even late, yet," is their rationale. You were due on the first so, in my mind, I can assure you that you are very late on the fifth.

But, I digress.

On the sixth, we can and do file for possession in our clerk of court office. Why? Because I don't want to get to the 20th when they still haven't paid before I start my actions. By that time, they may decide to hang out and see how long it will take me to evict. Eventually, they could figure it's cheaper to move than to pay me the, by then, two month's rent that is due. I don't want to give tenants that much time to build up debt or to plan alternatives.

It doesn't help the tenant at all to let them get further in debt. In fact, it's just enabling poor habits which won't help them anywhere in life. And, it definitely doesn't help me or get the mortgage paid which is, after all, the bottom line. If I can't pay the mortgage, I lose the house and they lose their place to live.

So, I begin every tenant relationship the same way, letting them know the rules of conduct that are expected - beginning with, and especially, on-time payments. I let them know the consequences if payments are not on time - court proceedings and added fees on top of their regular payment. These are not fees I'm adding, these are fees they're creating for themselves by not abiding by the terms of the contract. My end of the bargain is to provide the housing they live in, which I've done. Their end of the bargain is to pay the agreed to amount on the first of the month. I see no confusion in that arrangement.

Beyond the court actions, we report to all three major credit bureaus and to online rental screening services the non-payments and late payments which will haunt the tenant for years to come, not just by me.

Save yourself time and money. No need to send repeated late notices. They know they're late. We send a "pay or quit" and let them know we have filed at the courthouse on the 6th of the month. They must now come in and pay their rent, late fees, and court filing fees in order to stop the eviction process. If they don't want to move, doing this once or twice usually ends the bad habit. If they don't intend to pay, we have nipped it quickly and don't lose more than one month's rent.

Be sure to know the eviction laws in your state. In some states, the process is more difficult and time consuming. Typically, late is three, five, seven or ten days before you can start the legal eviction process. Whatever it is, you don't want to delay the process by taking your time getting the ball rolling. I want my tenants to know, without a doubt, what our actions will be if rent is not paid as agreed.

The most critical time to begin the habit of swift enforcement is the first few months of tenancy. Once they recognize you are not a slack landlord, you should have a smooth relationship and on-time payments.

If you have not dealt with tenants before, your first instinct will tell you to be understanding and work out a catch-up plan for them because, after all, there was a sickness/illness/death/flat tire/paycheck mishap/ etc., etc. and you can understand how this can happen. Stop yourself. Take it from someone who's heard all the stories and has tried everything to be the "good guy" - it's a business.

Payment is due from the tenant just like mortgage payments are due from the landlord. I'm sorry about their life issues getting in the way of their paycheck, but you can't let their life issues get in the way of yours.

Be reasonable, be responsible. Naturally, if the resident has a good record but a problem arises, you should work with them. A good tenant is one you want to keep.

What's your experience with late payments?

My name is Karen Rittenhouse and I've been investing in real estate full time since 2004. In the past few years, I have bought and sold roughly 100 single family homes. Please check out my blog -

As a company, we buy, sell, rent, lease, owner finance and manage properties for ourselves and for others. Check out our site at

I also coach and train anyone interested learning about investing in real estate.

Source: EzineArticles
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