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How
to Collect Late Rent Payment and
How Much Late Rent Fees to Charge Tenants
Collecting
late rent payment from tenants can be a walk in the park if you
know the right steps to take. Learn what are the tried and tested ways
of collecting late rent and charging late rent fees right now.
How
do You Chase Your Tenant for Late Rent Payments?
Some
difficult tenants can give you a hard time when you are collecting rent
from them but you can avoid most ugly situations by having a solid plan
in the first place.
For starters, prevention is always better than cure so it is
helpful to give your problem tenants a gentle reminder a few days
before the rent date. You can simply email them or give them a quick
phone call. This way they cannot use of the all-too-common "I forgot"
excuse on you when it's time to pay up.
If your
tenant still falls behind in his rent payments, then send
him a late rent notice (which doubles up as a warning letter). Click here for our free late
rent letter to collect late rent payments and impose late
fees.
Should
You Impose Late Rent Fees for All Your Tenants?
Charging late rent fees is optional so naturally we have two
opposing camps when it comes to this issue.
Some
landlords belong to the "Mr Nice" camp where they do not believe in
charging their tenants for late rent because they feel that
doing so
builds goodwill and trust. They are more casual and will let their
tenants off without penalty charges as long as they receive
their
rent in the end.
However, we highly
recommend that you should charge late rent fees for a
few solid reasons.
To slap on
late rent charges, your lease agreement forms should come
with a clause that reads like this: " If
rent due is not paid on of before the _____ day of the month, Tenant
agrees to pay a late charge of $ _______________ plus an additional
late charge of $ _______________ per day until the rent is
paid in
full."
From
our experience, we have discovered that some new tenants like to test
the
waters with their landlords. They will purposely pay their rents late
for the first month to see how their landlord will react. If you give
in this first time, they will take it that you will be willing to
accept late payments in the future as well.
It's
human nature to hold onto their hard earned cash. It's that type of
mindset that drives tenants to delay their rent payments even when they
can afford to pay up right now.
By charging your tenants for late rent, you are sending a clear
message that you mean
business on your landlord issues. It will train your tenants to see the
importance of timely
rent payments by giving them an incentive to pay up on time.
How
Much Should You Charge for a Late Rent Payment?
Most
landlords generally set their late rent charges at 5% to 10%
of the rent amount. Some landlords may also demand a daily penalty fee
such as a $15-per-day late charge for each additional day that they
have wait for the rent.
Do remember that the whole point of late rent
charges is to compensate landlords for any losses - It's not a weapon
for milking or exploiting tenants.
If you go wild and randomly overcharge
(late fees above 30% of the rent are generally considered
overkill), your tenant can refuse to pay a single cent and
file a
complaint against you.
Who
Keeps the Late Rent Fees? - Landlord or Manager?
In
most countries, there is no hard-and-fast rule on who
gets to pocket the
late rent charges so be sure to discuss this matter with your property
manager beforehand.
Unless your property manager has won your trust, It's a good idea
to insist that he or she hands over the late rent fees to you...
otherwise some shady managers may allow your tenants to pay
their
rents late on purpose so
that they can collect late rent payment fees.
Allowing your
property manager to pocket extra fees for late rent payment may
"entice" him or her to be more reckless when screening tenants... and
we all know the havoc that a bad tenant can unleash if he or she is
allowed to slip through the screening process.
Read
what our visitors have to share below OR Scroll down to
add your own comment
What are Your Best Tips for Collecting Late Rent or Charging Late Rent Fees?
If you are stuck with nightmare tenants, making sure that they pay their rent on time can be a real challenge for anyone. How do you collect late rent payments and charge late rent fees? Share your valuable experience with everyone here - We will love to hear your tips, comments and real life stories:
What Our Visitors Have to Say on Dealing with Late Rent
Click on the links below to read the valuable tips that our other visitors have to share:
Do you want to learn MORE practical
must-know facts on
handling bad tenants?
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this Collecting Late Rent Payment page to our How
to be a Landlord guide
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