I am wondering - I have a tenant who is taking good care of my property but is always 1-3 weeks late on rent, doesn't call to explain (or lies about why), and who I sometimes need to chase down the rent, would you consider that a good tenant? And renew the lease when it's up? I've heard so many 'bad tenant' stories that I am wondering if I have a decent enough tenant to try to keep just b/c I know they're taking really good care of the house? And just accept that the rent will always be late.
I would not say he or she is a good tenant since they usually pay their rent late. However you do get your rent and they are taking good care of your property. Some tenants may pay your rent on time but end up trashing your place and in the end you will lose anywhere from 6 month's rent to an entire year of rent and that is you do not also have to pay for an eviction process to get them out. I would say keep them but try to get at the bottom of why they are always late.
I've had tenants like that. Of course, the best tenant is one that always pays on time, takes immaculate care of your property, and never complains about anything. If I had to choose which of those three check points to slip on, I'd probably choose paying on time.
The challenge for you is not to get complacent. Whenever he is late with the rent, you must contact him and remind him he is late. The last thing you want is for a 2-week late payment to become a 4-week late payment because you didn't contact him at the 5-day or 10-day mark to remind him. Once a tenant is a full month behind, the odds of the tenancy ending badly for you increase exponentially.
Does the lease you have with them specify when the rent is due and what happens if they are late? Do you feel as though you have trained this tenant to pay on time or do you think they are taking advantage of your good grace?
I don't think any tenant tenant that pays me late is good. however, I have set a clear expectation of what happens when I don't get rent. An eviction.
Yeah- interesting one. When I see these kind of titles in the forums, I get my "no" post ready, but this one is different. I guess, given the choice of these three people, 1) your tenant who is late but pays in full and takes care of the place 2) a tenant who doesn't pay at all or 3) a tenant who pays on time but trashes the place and/or is very needy, I'd take your tenant.
Do you have a late payment penalty in your lease? If so, make sure to apply it every time he's late. That might fix it.
You might also think about talking to him about a different payment schedule. I have one tenant who likes to pay the day after he gets paid, so he pays half the rent in the middle of the previous month and half at the beginning of the month. I actually really like that, because I get a nice kick of cash in the middle of the month in case I need it. Maybe your tenant could benefit from that, or even a weekly schedule. Those smaller payments are a lot more manageable for someone struggling to manage money.
Consider setting up automatic withdrawal.
Most major markets right now are hot. If you are in a hot market I would consider terminating the lease and get a better tenant possibly at a better rate. Your lease should specify penalties for late payment. We had a tenant situation similar to yours and he paid $100+ late fees each month. However we did not renew his lease.
Derek DeGuire MBA, CCIM, DeGuire Properties | [email protected] | 817‑281‑8595
Yes that's a good idea - offer to spread it out. I moved out of state (this was my personal house so it has a lot of expensive upgrades that would cost a fortune if trashed) and hired a realtor/property manager to find a good tenant. The guy/family he "found" was someone he said he'd rented to before, was a great tenant, etc.
So I paid a month's rent as finders fee and the guy moved in and immediately started paying late. Looked into him then and found out he has tons of municipal court cases pending or closed from other creditors so he tends to not pay bills. The 2nd time he was late I put a 3-Day Notice on his door (paid an attorney) and he paid up.
Frankly, I think he just doesn't care about paying on time. He and his wife both have good jobs. If I didn't know they were taking care of the place, I would have evicted by now. But I look at his Facebook page all the time and he's always posting pics of the inside of the house and it is immaculate. They even polished our hardwood floors, which didn't need it. Go figure. His lease is up in a couple months. Trying to decide if I should let them go month to month or ask them to leave.
The lease has clear terms, with late fees. They just ignore them. My feeling is that they work the system. My gut tells me that If I gave them a 3 Day notice each month b/c they are late (expensive to do) they would pay up then but not pay me late fees.
I would not consider this tenant a good tenant. In my opinion, a rental property should serve three purposes, in my order but yours might vary:
1. Provide a high rate of return relative to other investment opportunities;
2. Provide protection of principal at a minimum and growth of principal at a maximum;
3. Provide favorable tax advantages.
So you are meeting #2 and #3 but are having trouble with #1. For me, that's the whole point of owning rental property, as I could just as easily have my money invested in something else that would pay me a dividend, and I wouldn't have to chase the company down for my money.
I think I would ask this: is there anything inherent in your market, or your property, that leads you to believe that this is the best you can do? If your property is a dump, or you are in a 30% unemployment area, then you have accepted a narrow window of possible tentants, and thus you may have to live with the late rent situation. If you have a nice place, however, and a reasonably healthy economy, and your property is priced at or slightly below market value, there's no reason you shouldn't be able to find renters that pay on time.
I could deal with a "consistent" late but being late 1-3 weeks would be too much stress for me. That requires filing for failure to pay rent every month and chasing them down for rent. I couldn't put up with it.
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