I am purchasing a property with tenants in place. Most of them are on month-to-month arrangements and have dinosaur lease agreements so I plan to renew with my lease agreement. One thing I was conisering doing was upping their rent and offering a rent discount for payments on time. Then a late fee for payment after the 5th. I think this would give them more reason to pay on time, if it becomes an issue.
For example, let's say current rent is $700, my new lease would provide that rent is increased to $750 however they get a $50 discount if rent is paid by the 1st. If payment is not received by the 5th a late penalty will apply.
Does anyone see any issue with this? Not that it should matter but the place is under market rent right now and would still be at $750. I plan to solve the rent issue at some point but I don't want to come in an bully anyone around.
First, check your state laws to make sure it's legal in your state.
I will say, that, that's how we do our leases, and love it! We turned a habitually late payer to paying on time! It's great because it gives both parties what they want--- cheap or same priced rent, and you get the $$ on time! We love it, and always set up our leases at a discount!
Sounds good. I don't know whether I will have problems with these people but I plan to present new leases anyhow and don't think this could hurt.
Years ago we (1980s) did this, but now we do not bother. Now we just have late fees, and issue a POQ on the 6th business day of the month. Tenants get one POQ notice. If they require more than that, they obviously cannot afford our apartments and are issued a 30 day notice to vacate. We are into "low hassle" LLing, and discuss this with applicants prior to move in. If the tenants are having short term financial problems, they can borrow from family or friends, or from the local churches or social service agencies. I don't chase rent and I don't work with tenants.
I do send monthly rental invoices from Quickbooks. I modified the default QB invoice to read "Rent Due" and send on the 25th of every month for the next month's rent. Easy, peasy -- especially for a CPA who probably already knows QB.
BTW, I am very comfortable asking tenants to go to the local churches to ask for rent assistance. I give every month to my church, and my church offers rental assistance, so why don't I do it directly? Because forcing the tenant to go request aid makes them get off their butts to help themselves. Don't make it EASY for the tenants to get behind. Letting tenants slide on rent is not good for you -- or good for the tenants.