Educating your tenants - where do you draw the line

18 Replies

I am about to become a first time landlord, on June 1...

Til now, in my very short investing experience, I have only dealt with PM's and never directly with tenants. But I am willing to give it a try bc the place is a condo and so many big maintenance items are HOA's headache and not mine, plus the place is relatively close to me (NJ) unlike others...

Having said that, I am reading through blogs here and becoming concerned..I want a long-term relationship with my tenants obviously and hope it works out but as long as it is mutually respectful!

The condo is fully rehabbed and so I do not anticipate any big issues. Is there a reasonable way to "educate" your tenants that changing light bulbs is their responsibility and also any issues caused by the tenants themselves are their responsibility as well? 

Second Question - I added to the lease that tenant is to pay "late" fee if the rent is not paid within the first 5 days of the month. How can I enforce the rule? Another words, tenant may simply ignore me and continue paying late but, as long as they pay I would not evict them obviously...

@David K. ,

Upon move in, we provide a "Lease Highlights" to all the tenants-- clearly focusing on the important things, such as payment, emergency information,  and a brief overview of tenant expectations and landlord expectations.. who is doing what?     I like to think about it as the lease for people with ADD.        Anything you want clearly pointed out-- put it here, 1 page, very clear bullet points. 

You enforce the rule by charging them the late fee.   If the tenant is late, and doesn't pay, let them know the next payment is automatically late as there is a fee outstanding.   Check out cozy.co, and have it all set up and done online, so much easier!

Hi David, 

On the first page of your lease include a "top 10 things you should know" or something along those lines to clearly state your expectations. Although your tenant is responsible to know what's in your lease, its sometimes easier to go one step further to simplify your expectations and have a single sheet they can go back and reference to if needed. 

Check your state's landlord/tenant laws - but where I live and previously worked, we charged $50 late fee and $10 each additional day for X amount of days. Also, we only accept the payment in full. This will help them pay quicker because it gives them no other choice. 

"as long as they pay I would not evict them obviously..."

When a tenant is OK paying a late fee and a landlord is not prepared to evict for repeated late payment there is absolutely no way to stop them from paying late.

When a landlord is not prepared to evict this is a signal to their tenant that rent is due when they choose provided they pay the fee..

@Thomas S. , sure I understand that it gives tenants confidence and free pass on bad habits but evicting costs money, plus I am not sure that legally, one could be evicted for paying late in state of NJ.

@Jenifer Kynor - great idea to only accept full payments!

@Linda D. - I should look into lease highlights one pager. Also will look into cozy.co -  i am all for everything online!

Could I ask for a sampler of highlights or a summary page that someone here uses

@David K. Don't worry about all the potential problems that might arise. Educate your potential tenants about what you expect as to lightbulbs, recycling, etc. as you do the walk through.

-But please keep in mind all of the horror stories you have read here when you interview potential tenants. If a red flag goes up, don't ignore it.

-Have your tenant login to cozy and pay for their own background check. That way they know it is real and relied on and they will want to preserve the pristine nature.

-Get copies of a notice to cease and a notice to quit. If your rent is not received, present the notice to cease on the 5th with the requirement of the late fee and a warning of prosecution of eviction and the collateral (reported) consequences. It is important to have each of these things at the ready to drop like a hammer- don't wait a day and don't scramble at the last minute trying to get a copy.

-One can most definitely be evicted for habitually paying late (I consider 3 out of 12 months habitual), and that is exactly what you will put in your notice to cease/quit.  N.J.S.A. 2A:18-61.1(j) . But you can't do jack until you hit them with a notice to cease.

-You may have priced yourself out of a number of potential problems by having a fully renovated condo, but it all starts with the screening.


If you're not going to evict if they eventually pay and ignore the late fee, you are simply inviting a bad relationship.  @Patrick M. has offered you priceless information here.  If you feel uncomfortable following it (especially when it's all laid out for you) I think you might want to reconsider being a landlord.  And I don't say that unkindly, just that you have to adjust your mindset and expectations or you will land in more trouble and with greater expense than the eviction fees you envision.

@Heather DeGeorge and @Patrick M. - I am willing to give it a try (being a landlord), but I am prepared to hire PM at any moment. I accounted for one in my investment calcs.

The reason I was thinking that eviction is not the best way to go is because it would cost me money, which could potentially be more than the late payments. Why am I wrong here?

setting expectations starts with screening, showing and lease signing. Develop a "landlord speech" to give to prospective tenants where you set out your expectations.

@David K. in my experience I have not had trouble with tenants paying late fees, as long as I communicate and enforce the requirement. The only time I have not collected late fees is when rent was not paid either. In one of those cases, I evicted and got a judgement that included late fees. In the other case, I served notice to vacate, they left and and I took them to small claims court to get judgement for the rent and late fees.

Your success is going to come down to your ability to enforce your policies. 

As far as educating your tenant, I usually spend around an hour going over my lease. I explain in detail about late fees and eviction. My advice is be very clear up front so there are no surprises later. Some landlords gloss over the fine print in the lease, which is a big mistake.

@David K.  My point is that if you are not going to enforce the late fee, then don’t have one. It’s a matter of what you are presenting to a tenant in terms of how much they can get away with. If you actually land with someone that accrues late fees, it’s unlikely to stop there.  And if you let the late fees go once, you’ll have a hard time enforcing it if it becomes a habit.

You are starting off operating from a place of fear and already mentally preparing to avoid that fear. It’s just not a good place to start. And it could affect how you choose a property manager as well. 

There is guidance here to help you, but it’s not going to change your mindset/outlook—which is going to be a big factor in your success. It takes us longer to fill a vacancy because we are very cautious screeners but in 17 years (across NJ, MD and IL) we have not had to process an eviction.  We pay more in vacancy than legal fees but I’ll take it. 

thank you @Heather DeGeorge and @Patrick M. I totally get what you are saying.

I am going to encourage them to set up automatic payments, to avoid late fees. Also, if they do miss the payment, I will add the late fee to the total and will not accept partial payment. I will make sure they understand that eviction is written into lease and I will be ready to enforce it if they miss paying on time 3 times in one year.

I do know that the tenant has a very steady job, the kind of job people do not normally quit and they have been at the job for over 15 years. Of course things happen but I am hoping that my tenants will be nice and I will be nice to them and they will pay on time and keep the place in a nice pristine condition and will stay with me for years to come :) 

Write everything into your lease.  If you expect them to change the air filters monthly, or change light bulbs, write it into your lease.  If you expect them to pay their rent on the 1st, and you give them a grace period of the 5th, then expect that you will get your rent payment on the 5th because there is no consequence otherwise.

You can't evict them for paying habitually late, as long as they pay the entire amount owed.  Some will choose to run you ragged and get all the way to court date and pay you the entire balance on the morning before court.  Most leases (and court docs) state that if the tenant pays up, then the lease is still in place.  The only option at that point would be to not renew when their lease is up, or evict based on other items that aren't remedied like property condition/damage, non-compliance, etc.

Consider adding a daily late fee to your lease.  Start it on the 2nd of the month.  So, rent is due on the 1st, and late on the 2nd with a $15-$25 per day late fee.  This serves as better motivation for tenants to pay you on the 1st.

@David K. You must always have a hard yes and a hard no when dealing with your tenants, emphasis on no. Don’t equivocate, don’t encourage. Require and don’t allow. You are not there to make friends. 

Know your own rules and don’t allow them to be ignored, overlooked or “forgiven just this one time.”

Don’t pick up the phone when a tenant calls. Listen to the voicemail and prepare your response. If no message is left then it was not important. 

If it helps- think of yourself as a robot. The No-bot. Believe me when I tell you there is zero extra work and expense attached to answering no to a tenant’s request.

None of this advice will preclude you from being the best landlord that a tenant has ever had.

After a year if you want to go out and give 10% of your hard earned GROSS income, well at least you will be in a better position to evaluate and manage your rental manager.

But you won’t, because you will enjoy it after a month... and then after a couple of more you will think nothing more of it then brushing your teeth. 

Best of luck and have fun!

Personally, I wouldn't hire a PM. My families managed an apartment building for over 20 years and I am about to make my first big purchase of a 6 flat. It appears to me that property management is viewed as a daunting task and full of problems and that's rarely the case. You will run into issues but with just 1 condo, I would not waste my money on a PM. The odds of you finding a nightmare of a tenant are VERY low if you just do your due diligence. You'll be surprised how many people will not call back once they find out you do credit checks and that will weed out the majority of them. We found that the biggest issue in renting to tenants is that the apartment doesn't belong to them so they will treat it as such. Plan to paint and put in new carpet after every tenant that stays longer than 2 years but thats about the worst of it. Your going to see that it really isn't a hassle and wonder why everyone doesn't do it haha.

I would never hire a property manager when I have never been a landlord or managed a property before—and especially not because you anticipate problems. The PM is your AGENT and they act on YOUR BEHALF.  That means you are still running the show and still carry responsibilities to ensure the right things are done.  You still sign a contract that lays out who does what and without the experience, you will miss something or not understand how something can bite you. We watched a friend go through this (we became friends after he was already involved). It was a nightmare and he wasn’t a dumb guy.  But he envisioned the PM taking care of the things he didn’t know for his lack of experience. 

Bad idea. 

If real estate were as easy as buying a unit, handing it over to someone else to deal with and collecting some income, more people would be doing it. 

Being the first time is really tough since you are doing it yourself. Been there done that. My suggestion will be when they are late, always take the full rent plus late fee. They will ask if you can waive the late fee just say no. The second time they are late, serve the notice to pay, dont worry about costing money for eviction, because no matter how worried you are, if they have no money they have no money. It just something you cant control. So better be prepared, let them know if they are late they may get evicted. Normally people will just try to test the water and see how far you can go. They are late 1 day this month, you do nothing, then they are going to late more days next month.

QUICK UPDATE:

Had my initial conversation with tenant...Told them that I am signing them up to the online portal (Cozy) and expect them to pay on the 1st and electronically. Told them that I will be charging late fee and that eviction rules kick in if they are late to pay the 3rd time. Also told them that any maintenance under $100, unless really justified, is on them and not to bother me with silly stuff like changing light bulbs or ac filters for them.

They seem to take it very well and ensured me that they themselves do not want to deal with checks or remember to pay and so they wanted to set up automatic payments to me...They also understand and agree to the other rules.

So far so good!

Thank you everyone! Lots of great tips here!