Is late rent payment in Indy normal?

Question

Hi all,

My tenants in Indy start to pay rent late after 3 months moving in. The house is in a decent area, rent for $1100. My property manger told me among the houses she manages, there is about 25% late rent payment. I am wondering if this is normal in the Indy market or the issue with this particular property manager. Please help! Thank you!

Andrew Syrios · Answer

I don't think it's normal in any market. You might want to tighten your application criteria a bit going forward.

Daniel P. · Answer

I agree with Andrew! Life happens and this may happen periodically but shouldn't be the norm.

Joel Wilmoth · Answer

Discuss exactly what the tenant has been told by the PM.  I have found that some PM's seem to find it acceptable to allow late payments if the late fee is substantial enough to add to cash flow.  We have taken over properties where tenants have been trained they can pay late if they pay late fee.  An escalating late fee is often the way to avoid this line of thinking...or much more aggressive management.

Thomas S. · Answer

Repeated late payments are not normal anywhere and are always due strictly to management enforcement policies. The tenant is not the problem. A tenant repeatedly pays late because they have been trained by the owner that it is OK to do so.

Random and infrequent late payments do happen everywhere for many different reasons. Never acceptable but when managed properly should not repeat.

Joel Wilmoth · Answer

This rate seems high but without more information it is difficult to assess.

Are there penalties for late payments?

Who placed the tenant?

Screening that was done on the tenant?

Unfortunately, I see a lot of out of state owners who are getting treated poorly in these situations.  Please feel free to message me if you want some other ideas that might explain the issue.

Ali Boone · Answer

That'd be ridiculous for it to be a standard anywhere. If it's common and typical, that's one thing, but that doesn't mean it should be accepted. They should absolutely be charged their late fee so at least you get that small extra profit. And if they don't pay before the file for eviction deadline, file. If you tolerate it, it'll keep happening.

Vivek Khoche · Answer

@Ruei-Jiun Hung- You need to train your PM and tenant else they will educate you. OOS is challenging and chances are slim in long term. Not sure about your size of portfolio but you need to visit the property and make sure of big surprises quite normal in this business. Recently my investor friend got $27K tenant turnover bill.

Good Luck

Vivek

Ruei-Jiun H. · Answer

The tenants pay the rent every month late since this May, but they didn't pay late fee yet.

Simon Lopez · Answer

@Ruei-Jiun Hung How did everything pan out?  When did they finally pay and were they late again this month?

@Joel Wilmoth Im new to investing.   i like the idea of an escalating late fee.

Ruei-Jiun H. · Answer

Thanks @Andrew Syrios, you are right. I should also check their credit, I assume my PM will do that. Do you do at least 620?

@Joel Wilmoth, the penalties for late payment is $150, but they haven't paid yet. I bought this property through a turkey provider, so they place the tenant (They are also my PM now.)

My tenant has 6 years job history on the current job, income is 3x of the rent.

Is late rent payment in Indy normal?

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