Charging tenants late fees

[Devin Haertling]

I self manage 6 SFR. With my first lease I started with a flat $50 fee if rent wasn't paid before the 7th of the month at 9pm. A tenant took advantage of that and now pays at the end of every month but I get an extra $50 each month With another lease I really wanted to discourage paying late so I changed it to $5 per day after the 7th at 9pm. That wasn't enough to deter late payments either Now I charge $10 per day after the 7th at 9pm and I still have a tenant that habitually pays late. Now it's nice to have the extra income but I was imposing the late fees as a motivation for my tenants to pay on time. Anyone else have thoughts? What late fees are you imposing and how far behind do you let them get before asking them to vacate/start the eviction process?

[Steve Babiak]

I still remember the one anecdote from an experienced landlord who was performing training. One habitually late paying tenant was so accustomed to including the late fee when paying that on the one occasion where the rent was on time, the tenant still included the late fee!

Some people respond better to the carrot, some people respond better to the stick - when it comes to whether reward or punishment works better as their motivator. This is why some advocate a rent discount (carrot) for early or on time payment, while still employing late fees (stick) for untimely payment. You'll have to figure it out for each tenant ... or just use both ...