Does anyone use biweekly rent payment schedule for tenants?  We are inheriting some tenants that have historically had some difficulty paying.  They have been long-term tenants, and the prior landlord was apparently chasing the rent quite a bit.  They are lower income, and likely have difficulty prioritizing rent.  We are hoping to change that, and come in and provide some structure.  On its face, bi-weekly sounds like a bad idea.  But I am wondering if anyone is doing it, why they are doing it, and how much success they have had with it.  Please chime in if you are currently doing this, or have tried it in the past.  

Yes for one tenant I am. She has an extremely tight budget and I asked her if that would help, she was very appreciative. I had a 4 year history with her prior to her separation. Auto debit on pay day is really nice. You get paid right after they do which doesn’t give them much time to spend it. Doesn’t solve the problem of budget but it would help solve stupid (to a degree at least).

I have taken biweekly when my tenants had cash flow issues.  They were actually doing a good job paying on the biweekly schedule and as long as I was made whole by the end of the month I was totally fine with it. 

Also, I get paid at work biweekly and there are 26 pay periods in a year (52 weeks/2). So instead of 24 bieeekly payments so you may end up with 26 and a little more cash at the end of the year if you’re breaking a monthly payment into biweekly. Just a thought. 

@Megan Moody , so instead of saying "Rent is $600/month payable as $300 on the 1st and $300 on the 15th" you structure it so that rent is $300 every two weeks...eventually netting more than you would had rent just been $600/month?  Just making sure I understand.  

I like this idea because it rewards the tenant by allowing flexibility with their rent payments and rewards me with a bit of extra cashflow.  It looks like that actually nets me a full extra month of rent over the course of the year.  Which would also help me recoup some extra to add to their security deposit, since prior landlord only charged 1/2 month rent for security deposit.  

Originally posted by @Samantha Soto :

@Megan Moody , so instead of saying "Rent is $600/month payable as $300 on the 1st and $300 on the 15th" you structure it so that rent is $300 every two weeks...eventually netting more than you would had rent just been $600/month?  Just making sure I understand.  

I like this idea because it rewards the tenant by allowing flexibility with their rent payments and rewards me with a bit of extra cashflow.  It looks like that actually nets me a full extra month of rent over the course of the year.  Which would also help me recoup some extra to add to their security deposit, since prior landlord only charged 1/2 month rent for security deposit.  

 That would be a change in the rent amount.  If you go from $600 monthly rent to paying ever two weeks the amount paid should be $276.92 not $300.  Don't take advantage of someone's  poor math skills by saying "instead of $600 once a month, pay me $300 every two weeks."

Originally posted by @Jon Holdman :

Originally posted by @Samantha Soto:

@Megan Moody , so instead of saying "Rent is $600/month payable as $300 on the 1st and $300 on the 15th" you structure it so that rent is $300 every two weeks...eventually netting more than you would had rent just been $600/month?  Just making sure I understand.  

I like this idea because it rewards the tenant by allowing flexibility with their rent payments and rewards me with a bit of extra cashflow.  It looks like that actually nets me a full extra month of rent over the course of the year.  Which would also help me recoup some extra to add to their security deposit, since prior landlord only charged 1/2 month rent for security deposit.  

 That would be a change in the rent amount.  If you go from $600 monthly rent to paying ever two weeks the amount paid should be $276.92 not $300.  Don't take advantage of someone's  poor math skills by saying "instead of $600 once a month, pay me $300 every two weeks."

 I don't think we should consider that taking advantage of someone. If landlord is willing to go out of their way to help tenant by  accommodating bi monthly payments, landlord should be compensated for it. this comes in the form of money. This also gives the tenant more incentive to figure out their cashflow issue and correct it in the future.

@Jon Holdman I would thoroughly explain to the tenant that there is a difference in amounts between the two choices.  They are paying a premium to be able to pay bi-weekly.  I wouldn't be trying to pull the wool over their eyes.  But if they want the flexibility I think it's a fair arrangement.  

@Andrew Boettcher as long as its presented that half a months rent every two weeks is a 8.3% increase in the rent, I have no issue.

Hi  - I should have clarified - when my tenant was in this situation I was very upfront with her that over the course of the year it would net out to an increase in the rent (2 payments worth) and wrote an addendum to the contract/lease agreement that I had her sign acknowledging that she was aware of this and the biweekly payment terms.  She was fine with it,  but was having a hardship coming up with the full rent payment on the 1st of the month. 

An alternative if you wanted to keep it rent neutral would be to stipulate payments on the 1st and 15th of the month, which would give you an even 24 payments over the year. 

I do offer bi-weekly leases. I explain that a monthly lease is cheaper UNLESS timely payment is an issue in which case the monthly lease + 10% late penalty is more expensive than the bi-weekly lease. I require recurring payment set up through our website. 

Take a $450/month apartment as an example. With no late fees- rent is always paid with in the 3-day grace period annual rent is $5400/year

With chronically late payments a $450/month apartmen with a $45 late fee is $495  or $5940/year. In addition, habitual late payments over the grace period can result in eviction which is very damaging and expensive.

Bi-weekly rent is $225/biweekly period = $5859/year

I have done this for a tenant in the past with cash flow issues. They couldn’t even keep up with that. It was the monthly payment amount plus late fees divided by 2. My tenants were paid twice a month not bi-weekly. 

@Samantha Soto   We have done this before but honestly I would run your business now as if you would run it with 20 properties.  Do you really want to be checking to see if your tenants pay every two weeks, then if they are late with one payment but make one you have to go back and carefully show them how they missed a payment.  If the tenant struggles to pay rent because they cannot budget and this is a problem then I would just upgrade the quality of the property you are renting.  This is only going to be more headache as time goes on.

We offer it only if it is on an autopay with our online rental software, otherwise it would be to much work

@Samantha Soto For someone that has a history of not paying I would not recommend trying to work out a payment structure with them alternative to the lease they signed. If they do not have the money to pay rent and/or have the money and do not prioritize paying rent there is little you will be able to do to change that in most cases.

Just be sure to factor into your numbers the cost associated with evicting these tenants if they fall behind. Also, if you have not already done so make sure you are getting a clear picture from the sellers about how much the current tenant is in arrears. You want to make sure you know what you are walking into.

@Samantha Soto when I had properties with lower income tenants, I did this a couple times. They got paid every two weeks and I got half of monthly rent on pay day. They did get ahead over time, so I just kept track of where the payments were being applied. There were a couple times that car problems came up and we skipped payments, so they never really got that far ahead. The buffer was nice to have, because people living paycheck-to-paycheck are always one problem away from not making rent.

These tenants have been in the building since 2014, so they are relatively longterm.  Over the 4 years they have lived there, they owed the previous landlord almost $1500 in back rent.  Their payment is $600/month.  I guess if you are looking at 48 months, missing 3 months rent isn't the end of the world, but it's not a problem that I want to allow to continue.  The landlord in the past has worked out various payment structures for them.  I am hoping to retrain them.  I do like the way @Joe Splitrock put it, as adding a buffer.  I know we will have to evict if things keep getting off track for them, but I'm hoping that they will see that we are less flexible than the previous landlord (as evidenced by actually using late fees and following through with filing evictions), and will get their act together.  This will be our first property to self-manage.  Quite the learning experience!

Of course, everyone would love to work with a better tenant class. But at this point in our REI journey this is what we can afford.

Missing rent payment 1/16 months for 4 years running is actually the end of the world. If this is their history, no special treatment. It’s time to slide on down the continuum from Ned Flanders towards tony soprano. People will treat you exactly how you let them. Let them know, new landlord, new policy: late rent = got the road.

Even in B class properties your rent should be on time 100%.

@Kris F. , that's the plan.  I'd rather try to retrain them and keep them then have a turnover right when we buy the property.  We will cut them loose if we have to, but I think the old landlord just made it too easy for them.  

I understand. One other consideration is take a look at the wording of the current lease they are on... Ive absorbed tenants with a 1/2 Page lease which was basically printed on a cracker with spelling mistakes and signatures missing... was worth the turnover to get them out and insert my iron clad paperwork with a legitimate background check.

All kinds of nuances to this biz

They are on a month to month and I just spent $150 obtaining a 9 page single spaced iron clad lease from a local attorney.  I intend to get it signed at the end of this month if tenants are willing to, otherwise end of next month.