Last week, we went over some important aspects of rent collection.Today, we will go over three common situations we see regarding late paying tenants. We will also give you some strategies that you can take when faced with these situations.


Situation #1 – The tenant constantly pays late and won’t change their behavior.

We mainly see this happen when we acquire a property and the owner’s existing lease has low late penalties.

We have actually had tenants tell us that a $50 late fee is no big deal and they continue to pay late every month until they are required to sign a new lease.

The simple solution to avoid this problem is to set stiff late fees in the lease. We suggest 5% of the rent after it is deemed late and $20 per day each day after that. This step will eliminate most chronic late rent payers. Those that still miss the on time window because they are disorganized or can’t remember will pay you a hefty late fee.

Situation #2 – A continually late paying tenant has not paid the current month’s rent. This is the situation that is usually the worst for the owner. 

The solution here is as follows: make sure you communicate with these tenants immediately. If they don’t answer at home or on the cell, call their work, references and stay on it. You can also call from a blocked number or your friends number so they will not dodge you.

The goal is to assess the situation and determine whether they have the funds or not. Interestingly, we have found that if the tenants do have the funds they will engage with us in with angry demeanor and give us a date when they will be in to pay.

If you determine that the tenants do not have the funds and have no chance of getting them, the goal is to get them out of the house as quickly as possible. We find that when the tenants fully understand the negative implications that an eviction will have on them, they will be cooperative about just turning the keys in and moving their stuff out.

As a landlord, if you can avoid going to eviction, you will save yourself a good deal of money, lessen your aggravation, and get your property back into the rental market sooner.

We have actually found that if the above situation is handled correctly, some tenants can be very agreeable. We have had tenants move out fast and when they got back on their feet, paid back the rent the landlord lost while the property was vacant.

Situation #3 – A routinely prompt paying tenant suddenly does not pay the rent.

Again, the key here is to talk with these tenants immediately. We have found that this situation is not as bad as situation #2. This situation usually happens because of a sudden job loss or other unusual financial issue.

In the past, we have had success with tenants in these situations by explaining ways they can get the money until they can find work again. We make suggestions to the tenants like taking a cash loan with their car as collateral or getting city assistance or asking for help from their family.   

In summary, when a tenant pays late, the main thing is to reach out quickly. When you make contact, get to the root of the problem and come up with a resolution that minimizes negative consequences for both parties.