Increasing late fee to motivate rent being paid on time

[Randy Hallowell]

Hi all! Thanks in advance for your help! I have a tenant that is consistently late with rent. It started with a day or 2, then 5, 10 and now we are at 27 days. My rental agreement states that rent is due on the first and late on the 10th its the 27 today and I haven't seen rent. This has been the recent trend for the past 5 months. They get in it before the next month is due but not by much. They are good people and have taken decent care of the place. The rent is $1200. My current late fee is $50. I think if the late fee was higher they might make paying rent on time a  higher priority. We are out of contract and have been for a couple years now. Any or all feedback is appreciated. Please take it easy on the new guy. Thank you again!

[Patti Robertson]

My rent is due on the 1st, late on the 2nd. VA doesn't require a grace period, so we don't offer one. My lease calls for a late fee of 10% + $10/day to encourage tenants to pay as quickly as possible. If we go to court though, Judges often time reduce our late fees to 10%. Not always, but sometimes. Rather than offer what sounds like a punishment of a late fee, have you considered offering to let the tenants pay rent on their payday? Let's say their rent is $1000/month. If they get paid bi-weekly, offer to let them pay $500 every payday. Explain that they will pay a little more over the course of the year, but if they budget by paycheck this can help them avoid late fees. Instead of getting 12 payments of $1000 - $12,000, you will get 26 payments of $500 = $13,000. You still charge a late fee, but convert it to bi-weekly. Some months when they get 3 paychecks, they will also make 3 rent payments. This tends to be a win/win for both parties.