Anybody tried rent due on the 5th in order to avoid late payment?

Durham, NC · Member since 2013 · 502 posts · 215 votes

There is always a group of tenants who pay rent late often or even most of the time. I understand that life from paycheck to paycheck is hard to manage financially. I was wondering, why not have rent due when the paycheck has cleared, which can be the 3rd or 4th of the month. Instead of keeping part of the paycheck until the end of the month in order to pay rent, pay a day later. That should get the landlord ahead of the cable and utilities bills. I am curious if landlords have experimented with this approach.

0 Reply

178 views

Most Popular Reply

Natalie Schanne

Real Estate Agent · Princeton, NJ · Member since 2016 · 1k+ posts · 1k+ votes

Andreas W. - If the person hasn't saved enough rent from the 16th-31st paychecks, then they're not planning ahead for the bill on the first. No need to reward that activity. If I changed it to the fifth, they'd pay by the tenth. My rental's mortgage is due on the fifth. I could without interest penalties push the auto payment to the 14th-15th according to my mortgage contract. But I don't want to. You'll see plenty of smaller landlords who adjust in some way or another to accommodate when their tenants get paid.

4 Reply

See this reply in the discussion

30 Replies

Jump to latestLatest

Sort by

Natalie Schanne
Real Estate Agent · Princeton, NJ · Member since 2016 · 1k+ posts · 1k+ votes
9y
Andreas W. - If the person hasn't saved enough rent from the 16th-31st paychecks, then they're not planning ahead for the bill on the first. No need to reward that activity. If I changed it to the fifth, they'd pay by the tenth. My rental's mortgage is due on the fifth. I could without interest penalties push the auto payment to the 14th-15th according to my mortgage contract. But I don't want to. You'll see plenty of smaller landlords who adjust in some way or another to accommodate when their tenants get paid.
4 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
9y
Some landlords do modify their payment schedules however this does result in additional costs to the landlord for accounting and other related time wasted. I prefer to train tenants to pay on time or leave. All leases are very clear as to a tenants responsibilities regarding rent payment and as your business grows you will see the value in requiring tenants to manage their own money issues as opposed to their landlord managing their money for them. My tenants money problems are their problem and not something I want any part of. Pay on time or leave.
As a hobby landlord it is easy to do what ever you choose, as a business consistent standards are best maintained or costs run rampant.
1 Reply
Rich N.Pro Member
Investor · Haverhill, MA · Member since 2015 · 761 posts · 328 votes
9y
I would not for most of my tenants, the first is the first. The only ones I allow to the third is when the tenants have proven Gov't checks for the 3rd.
As Natalie has stated, tenants mostly pay with their next check if you allow them. Therefore, by moving the date, you are just moving their late due date.
0 Reply
Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y
If your rent is due on the 1st, and they are paying on the 5th....when you make it due on the 5th, they will then be paying on the 10th. Nature of the beast
[email protected]301-893-4635 Podcast Guest on Show #192
District Invest Group545 Reviews
Website View Page
2 Reply
Maria Bocanegra
Real Estate Investor · Chicago, IL · Member since 2016 · 77 posts · 18 votes
9y
I agree with all responses. Rent is due when it is due - do not let them put that last on their priority list. I have a tenant who always says she is never late because she squeezes in the monthly payment right before the late fee grace period expires. I had to remind her that technically she is always late because rent is due on he 1st, it is just that she hasn't always suffered a late fee because she will usually pay around the 5th. Late is late. And that mentality you must avoid enabling. I feel bad sometimes but then again I sometimes cannot understand why folks put the roofs over their head dead last.
1 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
9y
I serve notice on the second so if a tenant pays late it is still registered as a late payment in case in the future I am forced to evict for consistent late payments. The date the rent is considered late has no relation on the date fees begin. If the rent is due on the first state regulations recognise the rent to be late on the second. The grace period is simply government pro tenant mentality.
0 Reply
Bob Derwin
Investor · Mountaintop, PA · Member since 2013 · 110 posts · 57 votes
9y
My rents are due on the 1st. I provide a 7 day grace period to accommodate weekly and biweekly pay cycles. Since I allow 7 days to accept the rent as on time, I won't hear any excuses, a late fee is charged after the 7th.
2 Reply
Travis Hughes
Denver, CO · Member since 2016 · 82 posts · 46 votes
9y
Rent is due on the first and late on the second. You want tenants who not only understand that, but are also able to abide by that.
0 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
I write all my leases and offer a discount if POSTMARKED by the 5th. That is typically $100. Most times the tenants are able to take advantage of the discount. If not, they pay the full amount due.
0 Reply
Ryann Kluthe
Real Estate Agent · Omaha, NE · Member since 2017 · 26 posts · 19 votes
9y
John Thedford has an interesting idea I kind of like but that might not work for you since your lease is already in place. My rent is due on the 1st of the month with a 5 day grace period before charging a late fee. I think if you have a talk with the tenant about their pay periods and explain to them you are giving the 5 day grace period to make it work for both sides, they shouldn't take advantage and start paying on the 10th. I've only charged one late fee with this 5 day grace period in place.
0 Reply
Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
9y
The reason landlords want their money by the first of the month is so that tenants are paying ahead. If you take payment on the 5th, then the tenant has already lived there 5 days that month prior to paying you. If you change it to the 10th, then they have been there 10 days prior to paying you. The problem with pushing payment due dates later is it takes longer to get them out if they don't pay. You could easily be stuck with a non-paying tenant until the 15th of the month before you even serve notice to vacate.
If a tenant isn't going to pay rent for the month, I want them out as early in the month as possible. I don't let people live in my properties rent-free.
1 Reply
Jeff B.
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
9y
I've always used: Due on 1st, Late on the 5th - - late fees have been rare, as tenant screening trumps due dates.
1 Reply
Andreas W.
OP
Durham, NC · Member since 2013 · 502 posts · 215 votes
9y
I agree, tenants should learn enough money management to pay rent on time. Unfortunately, some just don't. Between the 3rd and the 18th, when paychecks come in, and the 1st of the following month, the rent money can burn a lot of holes in pockets and then it becomes my problem. I agree, if the tenants turns out to become a non paying tenant, I have lost 5 days in the eviction process. I had an inherited tenant who knew the law and every other month I had to send out the 10 day notice on the 4th, NC, and about a week later I got the rent. Tenant was on annual lease and abandoned the apartment before the lease was over.
0 Reply
Amy A.
Portland, ME · Member since 2012 · 616 posts · 550 votes
9y
It depends on your state laws. In my state we have to wait until the 8th to give a 7 day notice to start the eviction process, so it would make us wait longer if we had rent due on the 5th. As long as rent is in by the 7th there's nothing we can do anyway.
0 Reply
Marian Smith
Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
9y
I have a 5 day grace period and it has not worked well for me...the tenants that use it tend to pay late anyway and are the ones I kind of wish I had passed on anyway. I will be changing the policy next new lease.
0 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
9y
We have rent due on 1st. Late fee starts on the 2nd. No sense in telling a tenant rent is late on day 2,3,4 & 5 if there isn't a financial penalty. Not here to teach life lessons, here to make money.
3 Reply
Jerry W.Pro Member
Moderator
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
9y
My rent due dates vary, but I have a 5 day grace period. I have waited too long to evict sometimes, but have only only had to do one eviction for my own property in 20 years so it has worked out OK. I have recently started setting my rent price then putting in a $50 credit for paying on time. If not paid on time the "regular rent" is due, and 5 days after that a late fee accrues. This has worked really well for me.
0 Reply
Thomas Williamson
Investor · atlanta , GA · Member since 2012 · 287 posts · 148 votes
9y
I stopped worrying about late fees and the headaches that come with late notices years ago. We changed our system years ago to letting tenants pay the first half of the rent anytime before the 15th of the month, and the last half anytime before the end of the month. The results were immediate. The tenants love it! All my tenants have become long term (because they know that other landlords won't do the same for them), so this drastically cuts down on turnover, my stress went away, and we collect regularly twice a month from all our properties. This eliminated any adversarial relationships with the tenant, and when we advertise "Split your rent and no late fees!" We're flooded with great qualified applicants.
3 Reply
Natalie Schanne
Real Estate Agent · Princeton, NJ · Member since 2016 · 1k+ posts · 1k+ votes
9y
Thomas Williamson - interesting marketing idea. I'm glad it's working out well for you. How much of a security deposit do you have? In VA I only have 1 month's rent and need about 30 days to find a new tenant. If the person gives me rent on the first and a thirty days notice, I can fill the property with 0-7 days vacancy. If the rent is not paid, I still have time to evict before the sec deposit $$ runs out (and likely have to eat any apt damages.) I'd be concerned that a tenant would get to the 15th, decide not to pay, and then the eviction process would have started much later. I'd guarantee myself vacancy and lost income. I'd have half a month's rent (in sec dep) and only 15 days notice to evict the person and repair the unit. In Philly PA, the owner usually gets 3 months upfront - 1st, last and security deposit, so there's more flexibility. It's probably also different if you have the tools to take people to court to garnish wages for unpaid rent and damage judgements.
0 Reply
Kelly N.
Investor · SE, MI · Member since 2013 · 1k+ posts · 461 votes
9y
Our rent is due on the first, late if not received on the 5th, and for us that has worked very well. Over half of our tenants pay before or on the first, the rest are usually paying by the 4th or so. Occasionally, one of my early payers runs into a little bit of a cash slump and but still manages to pay by the 5th, and we have others who need to be reminded a time or two to pay by the fifth.
If I don't have payment on the 5th, we charge a $25 late fee on the sixth, and $5/day after that. We find that amount and additional penalty daily seems to be effective in getting rent on time, or quickly if it is late. I've seen just a flat $25 late fee, in which case the tenant will just pay that with the late rent sometime before the next month's rent is due, and I've seen a $2/day fee that kicked in on the 6th which just led to tenants paying a few days late since the fee wasn't high enough for them to care, both from leases that were in place when we purchased the property.
We have one exception. We rented to a couple that had the income but was still struggling to get past the paycheck to paycheck living, and he gets paid on varying days near the first of the month. They seemed to be trying to get on their feet, so my husband offered a longer grace period- rent is due by the 10th- for the first 6 months. So far it has worked out, we shall shall see what happens next month when the grace period is back to the standard length.
1 Reply
Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
9y
Originally posted by @Andreas W.:

There is always a group of tenants who pay rent late often or even most of the time. I understand that life from paycheck to paycheck is hard to manage financially. I was wondering, why not have rent due when the paycheck has cleared, which can be the 3rd or 4th of the month. Instead of keeping part of the paycheck until the end of the month in order to pay rent, pay a day later. That should get the landlord ahead of the cable and utilities bills. I am curious if landlords have experimented with this approach.
One thing to consider is that not everyone gets paid on the 3rd or 4th of the month. Many people are bi-weekly which could be after the 4th.
What benefit is there to you as a landlord to get paid later? I am trying to understand your logic in moving the due date to avoid late payment.
0 Reply
Lesley Resnick
Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes
9y
Perhaps my view on late rent is different. If you are late there is a penalty. Every state has laws that regulate the fees. Consider your cash flow on a late month vs a pay on time. I have reserves and do not run a month to month cash flow, so if they are late I am fine. I have a renter who is late and recognizes he needs to pay the fee, otherwise a good tenant.
The only issue I would have is if you have to chase the person down for the money. My goal is being a passive investor. I am not looking to KICK people out. That costs me money. I need to clean up the unit and will most likely lose a month of rent.
0 Reply
Aaron Z.
Investor · Virginia Beach, VA · Member since 2015 · 83 posts · 34 votes
9y
Natalie Vane Maybe in missing something... In VA you can collect up to 2 months periodic rent for a security deposit. You may choose to collect 1 months rent but that is not a legal limit. And I don't know why you'd take a smaller deposit amount just because the could pay every ~15 days. I hold rent due on the 25th of the month prior, $80 late fee due 5 days later. A couple years ago I instituted a pay rent by electronic funds transfer only policy and haven't had a late fee since. Much simpler process but I understand that it's not a good fit for all types of tenants.
0 Reply
Matthew Murphy
Investor · Rochester, WA · Member since 2013 · 221 posts · 30 votes
9y
Our rent is due on the 1st with a five day grace period. When we first started with rentals years ago our lease stated a $75 one time late payment but after a couple late paying headache tenants we changed it to $10 a day. No issues since..
0 Reply
Jim L.
Investor · Granite City, IL · Member since 2014 · 21 posts · 3 votes
9y
A few months ago I attended a seminar/sales pitch by a RE course inventor with the idea of offering a pay day option in the lease. This allows the tenant the option to pay half the rent every two weeks. So you divide the rent in two and they make 26 payments. And the landlord ends up with an extra month of rent.
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.