Tenant is 3 days late on rent

Investor · Milwaukee, WI · Member since 2018 · 16 posts · 8 votes

Just bought our property last month and there was an existing tenant. In the current lease that he signed before we purchased the property he has to pay rent in full on the 1st. There was no late fees in the lease. Now it is March 4th and he still hasn’t given us rent. When I tried to get it from him he said he won’t have it until Friday March 8th.

What steps can I take to make this process easy for both of us. My property is in Wisconsin.

Any advice will be great!

Thank you!

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Marcia Maynard

Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes

Allow time for your tenants to become familiar with your management style and for you to get to know your tenants. Meet with them and share your values and expectations with one another.

Be FRIENDLY (professional & polite), FIRM (establish a clear rental agreement and enforce the terms), FAIR (abide by the law and consider what is reasonable), FAST (attend to matters in a timely manner) and FLEXIBLE (if the situation warrants it.)

Make the effort to establish and maintain a good landlord-tenant relationships. Landlords need good tenants and tenants need good landlords.

When a tenant is late with rent, we call or text them to let them know we haven't received their rent and check in with them to find out what's going on. If they don't have the rent that day, we give them our Rent Past Due Letter, which reinforces the terms of the rental agreement, our expectations, and the consequences of not being timely with rent. If they don't respond to that favorably, then we serve the legal notice to pay rent or quit. You must be prepared to follow-through after serving a legal notice and realize this is the first step toward eviction. Some tenants won't really respond until they get the legal notice. If it gets to that point more than once, then the tenancy usually can't be saved.

Here's our Rent Past Due letter. Feel free to modify it according to the laws of your jurisdiction and the lease agreement currently in place.

[Your Company Letterhead with name, address, phone info]

[Date]

Dear _____________________________,

Your rent is now past due. Please pay your rent promptly so you may continue to live in the unit that you now occupy.

As per your rental agreement:

Rent is due on the first (1st) day of the month.

Rent is late on the second (2nd) day of the month.

We allow a grace period through the fifth (5th) day of the month to pay your rent without incurring a late fee.

On the sixth (6th) day of the month we charge a late fee of fifty dollars ($50.00).

If we do not receive your rent in full in a timely manner, we will serve you with a 3-day legal notice, “Notice to Pay Rent or Quit”. Each time we serve a legal notice, we charge an additional twenty dollars ($20.00) posting fee.

If you do not follow the terms of the “Notice to Pay Rent or Quit” we may then begin eviction proceedings against you and you will be charged with the crime of “Unlawful Detainer” if a judge upholds our claim.

The amount of rent now due, as of today’s date _________________, is as follows:

Current Month Late Fee_______________

Current Month Rent_______________

TOTAL DUE_______________

Time is of the essence. If you have not already posted your rent via the mail, please call us immediately to make arrangements for us to collect the rent in person.

Thank you for your prompt attention to this matter!

Sincerely,

[Your signature and title]

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Account Closed
Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
7y
Post a 3 day or quit and start the eviction process.
3 Reply
Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
7y
Tenants aren’t generally motivated to pay on time unless there’s a financial incentive to do so. So the lack of a late fee penalty is definitely not good, but nothing you can do about that for now since it sounds like you inherited that lease. Definitely change that as soon as you can though.
I’d issue a pay or quit notice as soon as your state legally allows you to so your tenant knows you mean business and that you expect the rent on time, even if there’s no late fee.
Perhaps you could also try encouraging him to get setup on automatic payments too, like the kind offered through Cozy, so you don’t have to go through this every month going forward. It’d be a lot easier for both of you.
8 Reply
Steven Pool
Superior, WI · Member since 2016 · 45 posts · 30 votes
7y
@Nathan Simons
I would check out this site and get familiar with the laws for Wisconsin:
https://docs.legis.wisconsin.gov/statutes/statutes/704/17
It's pretty easy to understand but you have to follow it to a tee.
Good luck!
2 Reply
Nathan Simons
OP
Investor · Milwaukee, WI · Member since 2018 · 16 posts · 8 votes
7y
@Steven Pool thank you! Would you recommended I give him a 5 day pay rent or vacate?
0 Reply
Steven Pool
Superior, WI · Member since 2016 · 45 posts · 30 votes
7y
@Nathan Simons
To be honest, that's most people's first answer and it may be the right one.
I found myself in this situation where the inherited tenant has lived there for 12 years and after I bought it was late 3 months in a row. Really late. Come to find out he had been in the hospital for a couple weeks then laid off and was going through the process for unemployment. So I've put him on a payment plan that he'll start next month and will have paid the rest of his overdue rent in 6 months.
And I don't have to deal with turn over and listing the property
I think it depends on your situation
Hope that helps
3 Reply
Marcia Maynard
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
7y
Allow time for your tenants to become familiar with your management style and for you to get to know your tenants. Meet with them and share your values and expectations with one another.
Be FRIENDLY (professional & polite), FIRM (establish a clear rental agreement and enforce the terms), FAIR (abide by the law and consider what is reasonable), FAST (attend to matters in a timely manner) and FLEXIBLE (if the situation warrants it.)
Make the effort to establish and maintain a good landlord-tenant relationships. Landlords need good tenants and tenants need good landlords.
When a tenant is late with rent, we call or text them to let them know we haven't received their rent and check in with them to find out what's going on. If they don't have the rent that day, we give them our Rent Past Due Letter, which reinforces the terms of the rental agreement, our expectations, and the consequences of not being timely with rent. If they don't respond to that favorably, then we serve the legal notice to pay rent or quit. You must be prepared to follow-through after serving a legal notice and realize this is the first step toward eviction. Some tenants won't really respond until they get the legal notice. If it gets to that point more than once, then the tenancy usually can't be saved.
Here's our Rent Past Due letter. Feel free to modify it according to the laws of your jurisdiction and the lease agreement currently in place.
[Your Company Letterhead with name, address, phone info]
[Date]
Dear _____________________________,
Your rent is now past due. Please pay your rent promptly so you may continue to live in the unit that you now occupy.
As per your rental agreement:
Rent is due on the first (1st) day of the month.
Rent is late on the second (2nd) day of the month.
We allow a grace period through the fifth (5th) day of the month to pay your rent without incurring a late fee.
On the sixth (6th) day of the month we charge a late fee of fifty dollars ($50.00).
If we do not receive your rent in full in a timely manner, we will serve you with a 3-day legal notice, “Notice to Pay Rent or Quit”. Each time we serve a legal notice, we charge an additional twenty dollars ($20.00) posting fee.
If you do not follow the terms of the “Notice to Pay Rent or Quit” we may then begin eviction proceedings against you and you will be charged with the crime of “Unlawful Detainer” if a judge upholds our claim.
The amount of rent now due, as of today’s date _________________, is as follows:
Current Month Late Fee_______________
Current Month Rent_______________
TOTAL DUE_______________
Time is of the essence. If you have not already posted your rent via the mail, please call us immediately to make arrangements for us to collect the rent in person.
Thank you for your prompt attention to this matter!
Sincerely,
[Your signature and title]
21 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y
@Nathan Simons you can read the law HERE.
It's a new relationship and the first time. I would give the tenant a written reminder that rent is due on the first day of each month. Then explain the process and consequences the next time he is late. Then you have to be diligent about actually following through with your word. If you say you will start the eviction process when he's five days late, do it. If you don't, or only do it sometimes, they will see you are wishy-washy and use that to their advantage.
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2 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
7y
When a tenant has not paid rent by midnight the day it is due the rent is late. As suggested you should give the tenant a written reminder. This is normally referred to as the pay or quit notice and is issued the day after rent is due. This will allow the tenant some time to pay and once paid the notice is canceled. If they do not pay within the time indicated on the notice you proceed to evict.
When they pay you make it clear that if in the future they should pay late again you will evict without the option of paying.
If you are serious about your business you follow all regulations to the letter and insure that your tenants do the same. Once you allow a tenant to pay late without consequences there is no reason for them to ever pay on time. If you are not prepared to replace a tenant that pays late then you live with the consequences. You have made it clear to your tenant it is OK to pay as they choose.
A late fee is generally not a deterrent and is intended to compensate the landlord for the inconvenience and additional costs for the landlord to collect rent. If a tenant pays rent late 3 times it is the landlords fault. Once a tenant falls behind in rent ultimately you will be forced to evict and will lose money.
0 Reply
Joe Chirdon
Real Estate Agent · Harrisburg, PA · Member since 2016 · 159 posts · 82 votes
7y
I agree, get him/her the notice to quit asap. Also, If the tenant is month to month, or the lease is expiring soon, I'd add a late fee clause that is in line with your state's laws. I've had tenants that decide the want to pay mid-month every month. The late fees can really add up. I usually charge 10%, if it's more than 5 days late.
1 Reply
Nathan Simons
OP
Investor · Milwaukee, WI · Member since 2018 · 16 posts · 8 votes
7y
@Nathan G. Thanks for the tip. Would you recommended I hand this letter to him in person or send it in the mail?
1 Reply
Account Closed
Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
7y
Hey neighbor. Use the 5-day pay or quit. Hand it to them or post it on the door - it matters not per law. I like to hand it to them in person. Check out WI Legal Blank for forms and books on landlord-tenant law. WI landlord law is also available online for free. You should have already become familiar with the laws, so get to it. Simple notice procedures and eviction procedures differ, but sending the simple notices is usually the first step in both cases.
PS - The City Of Milwaukee offers a free landlord class about once a month. Everyone is welcome and it is really good.
0 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y
In person is nice the first time because it shows you're making an effort and gives them the chance to see you're not a monster. But be careful because this is also an opportunity for them to sell you a major B.S. line or try to manipulate the situation.
The DIY Landlord Book4.7247 Reviews
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0 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
7y
"chance to see you're not a monster"
Looks can be deceiving. I consider any tenant that pays late as a bad tenant and prefer that they be afraid of me . Fear is a much greater motivator than respect. If they get the impression I am a monster all the better. My good tenants know differently.
0 Reply
Tanner Marsey
Rental Property Investor · San Diego, CA · Member since 2017 · 439 posts · 578 votes
7y
Hard to say.... maybe talk with previous owner if possible. There is no penalty on when the rent is paid so maybe he’s been paying the second week of the month for years now and if the previous owner was okay with that, that’s how the tenant has been trained. IMO if him paying late isn’t causing you to lose any money and he pays every month.... put up with it until he decides to leave. Bottom line being you’re getting paid, you don’t have to deal with turn over and hopefully he’s a low maintenance tenant. Just my two cents.
1 Reply
Jessica Jay-Maleski
Real Estate Agent · Scottsdale, AZ · Member since 2016 · 114 posts · 42 votes
7y
@Marcia Maynard thank you for this! It is beautifully written and I will definitely be incorporating it into my arsenal :)
1 Reply
Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Nathan Simons. Check your local laws and see if there’s a grace period to the 5th. That’s how
It is in my state.
Also you need a late fee, just make it the Mac allowable under law, for me it’s usually 5-10 percent of rent
0 Reply
Arlan Potter
Investor/Accountant/Builder · Meno, OK · Member since 2014 · 1k+ posts · 918 votes
7y
@Nathan SimonsIf he has been paying around the end of the first week of every month for a long time then that is his effective rent due date. If he has a history of it. Anyway, if he is a long term tenant and pays consistently that time each month then enjoy the consistency. Don't lose a long term tenant.
2 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
7y
@Caleb Heimsoth
"there’s a grace period to the 5th."
Nathan does not have a late fee so their is no grace period in his case. He is interested in how and when to deal with late payments.
0 Reply
Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Thomas S. I get that but it doesn’t matter if you can’t legally charge the late fee until the 5th. I am pretty sure that’s the case in NC
0 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
7y
"I am pretty sure that’s the case in NC"
I don't understand your point....what is the case. That there is a 5 day grace period ???? You can not have a grace period if you do not have a late fee.
0 Reply
Robert Steele
Investor · Lucas, TX · Member since 2010 · 620 posts · 352 votes
7y
3 days is not the end of the world. Just follow the advice given here about following through in a firm, fair and polite manner. These tenants may have been trained badly by the previous landlord. If so it will take time for you to train them right.
Don't be so quick to kick them out. You will have make ready, time off market and you may end up with worse tenants.
1 Reply
Jason Lee
Olive Branch, MS · Member since 2016 · 29 posts · 7 votes
7y
You stated that you inherited this tenant.
Did you also inherit their security deposit?
0 Reply
Quito Keutla
Real Estate Agent · Renton, WA · Member since 2017 · 204 posts · 151 votes
7y
@Nathan Simons Congrats on your purchase now the fun begins. Like others have mention be firm but pilot and follow you local policies. I find by getting to know them and understand the reason is a good way to open the dialogue, being this is a new tenant relationship. Happy Investing!!
2 Reply
Steven Pool
Superior, WI · Member since 2016 · 45 posts · 30 votes
7y
@Jason Lee
The security deposit, like the lease, goes with the property when it's sold. So if there was a security deposit then it should have been given to him at closing.
0 Reply
Gregory Chadwell
Real Estate Broker · Milwaukee, WI · Member since 2015 · 299 posts · 90 votes
7y
I’ve had tenants for years around this area some pay on the first or the month on the second and some pay on the third I do have a late charge per day after the first but I’ve learned on my multi families just go there on the fourth and get the rent and that way I only make one trip otherwise I’m coming back chasing everyone down people unfortunately people are creatures of habit as long as they pay every month I’m fine with that and unpaid late charges just come out of security per their lease
But I do agree a new tenant you need to lay down the expectations and what things are and if is no late charge in your lease you need to amend the lease
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