Investor · Brielle, NJ · Member since 2015 · 121 posts · 21 votes
I have a dilemma I would like to pose to the crowd. I have a sf rental in Florida with professional management in place that charges 8% per month. I have four homes with them. Three have been steady without any real problems. The fourth pays the rent late every single month. At least three weeks. They have never gone into the next month, but have never paid on time. the late fees are 100 per month, which they have also paid and I split 50:50 with the PM. The lease is up in March. It cash flows about $400 per month. My dilemma is that if I don't allow them to stay when their lease is up, I not only stand to lose for vacancy but the PM also charges a one month lease up fee. The rent is $900 per month, the mortgage and insurance is $400 per month. Should I get rid of these tenants and lose months worth of income or let it go since they have never gotten to the eviction point?
It seems like you have two separate issues.
#1 - the property manager is not doing a good enough job of collecting. They probably shouldn't be getting 50% of the late fee. It incentivizes them to not ensure the tenants pay on time since they generate more revenue from late tenants.
#2 - the tenant who pays late: If the tenant always pays even though it's late, I'd just bite your lip until the lease is up and then not renew. It will be cheaper than trying to evict.
@Jason McKinney that's what I'm trying to figure out as a relatively new landlord. They pay late every month but pay before starting eviction and lay the late fees. I'm interested in everyone's opinion on this specific question. im not interested in someone hijacking the thread with condescension about he or she is such superior businessman and everyone one else's opinions are "pure stupidity
So @David D'Ambrosio you are getting all those filing / court fees 100% reimbursed whenever the tenant pays late each month correct? If so then just leave it be and take the money. If they ever default to the point where court is scheduled then you have to make a decision as to whether you want them long term or not. Since you have a PM it's not really costing you any of your time just theirs so sounds like you aren't out anything.
I have tenants who pay late every single month and I file eviction on them every single month and every month they pay all the extra fees (sometimes upwards of $300 extra) plus my fees for my trouble. Is it a pain in the ***? Yes, but as long as someone is compensating me for the pain then I'm ok with it. From my perspective I'm getting a $150/mo rent premium so I'm happy.
Yes, they pay all the fees but are late every month.. I feel the same way as you regarding the additional money, but the "gurus" make it sound like I am setting myself up for disaster by allowing this behavior to go on. It would cost me much more money to not renew their lease, have a leaseup fee from the PM company, any walkthrough repairs and also any potential vacancy time. I appreciate your feedback @Robert Gilstrap
Yeah well the "gurus" are certainly well intentioned but don't always have a full picture nor is it their money they are spending to evict, rehab and re-rent. From what you describe, I would say let it alone, collect the extra money and move on down the road. Perhaps at lease renewal time your PM could put some pressure on the tenant by threatening to not renew if they don't get payments in on time but I question at what benefit since you are made whole and in fact profit from it each month. Tenants with poor money management skills have made me a LOT of money over the years so I happily oblige.
Also moving the due date is not a great idea either since you are making $$ by leaving it where it is.