late fees and incentives to pay on time

[Linda Quint]

Does anyone have a sure-fire way to get tenants to pay rents on time? How many days should I give before charging a late fee?  What is a fair amount to charge for late fees if rents are in the $1000.00 range?  I would rather figure out incentives rather than penalites.    Any suggestions are appreciated  Thanks

[Jim Walters]

I find the best way to get renters to pay on time is to state in lease that there is discount if the rent is paid on time. If I want to rent a place for $500 a month, I put on the lease "that if rent is paid by the 1st of the month, rent will be a discounted to $500 per month. Rent not paid by the 1st for any reason will be $550.00 per month." I put in late fees if the rent is not paid by the 7th of the month.
I find this works a lot better than late fees. There is a stigma about late fees. But everyone loves a discount. My renters on this type of lease almost always pay by the 1st and never ask for the discount price to be extended. But if no discount is offered in the lease, I find they usually pay a few dates late, they hate late fees and they try not to pay them.