Should I Offer to Extend Rent Due Date?

Rental Property Investor · Mililani, HI · Member since 2018 · 51 posts · 26 votes

I’ve noticed that one of my tenants consistently pays the rent on the 5th of each month. My lease states that rent is due on the 1st of the month with a 3 day grace period (this tenant specifically asked for 3 days). I’m guessing pay day is on the 5th. On the 5th of each month I get rent + late fee automatically deposited into my account. Should I offer to extend the grace period to coincide with pay day? I feel bad about collecting a late fee each month for rent being 1 day late, especially for someone who appears to be living paycheck to paycheck.

If anyone has experience with this specific situation and decided to be more accommodating, how did things work out?

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

Don't change your processes for individual tenants. If you say rent is due on the first and he pays on the 5th, odds are you will change it to the 5th and he'll pay on the 10th. Leave it.

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Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
7y
@Cassie Chun
Enjoy the extra cash. I would not change anything unless the tenant requested it. If they asked, I would accommodate them if they have been a good tenant. Its good to have compassion for people. More people should be that way.
Good Luck.
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
7y
Talk to them and say you notice the rent is always 5 days late. It might be that they get paid at an odd time and wait for the cheque to clear or maybe they will always be 5 days late no matter what day the rent is due.
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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
7y
@Cassie Chun Does your bank feel guilty when it charges you a late fee for being 1 day late?
Of course I think it is important to treat your tenants well. Tenant turnover is one of a landlords biggest expenses. I would do as @Theresa Harris suggests and talk to the tenant. Changing the dues date may be a big advantage to them, or it might make no difference as the problem is bad financial habits.
2 Reply
Yossi Lurman
Lender · Maryland/Washington · Member since 2019 · 11 posts · 4 votes
7y
@Cassie Chun Maybe just offer a 5 day grace period. The property management firm I used to work for offered a 5 day grace period across the board.
1 Reply
Ross Kalmbach
Rental Property Investor · Plano, TX · Member since 2016 · 65 posts · 54 votes
7y
I had one tenant that was the same way - payday was on the 5th. I allowed her to start payment on the 5th and I received the deposit around the 10th. After two months of this - I noticed the payment was later and later. She then said they changed her pay date to the 10th. We had to frequently go to the location and pick up a money order usually not till around the 16th. It kept getting later and later. We never gave a notice to pay - therefore we allowed this to happen. Lucky she wasn't a bad tenant except for the payment timing and once the lease was up we terminated the month to month. It is not your responsibility to plan financially for the tenant.
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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
7y
"Should I offer to extend the grace period"
That is illogical. Your tenant is choosing to pay when he does and voluntarily pays a late fee. If it were me I would force him to pay on the first rather than move his due date. That is the proper way to operate a business. It's his choice, leave it the way it is.
Your tenant is a flake, don't cater to it or you will be obligated to do it for every tenant you will have in the future..
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David M.
Rental Property Investor · Scottsdale, AZ · Member since 2018 · 49 posts · 44 votes
7y
There was a time in my younger days when paying rent by the first of each month was a challenge. When I paid late, I was embarrassed that I received special attention from the landlord more than anything. I gladly paid any incurred late fees to make the problem go away as quickly and with as little fanfare as possible. The last thing I would've wanted was the apartment complex coming to me to see if I needed something financially. That's me, I understand not everyone may not feel the same, this individual may welcome a conversation, however you just don't know.
Your tenant sounds like he is aware he is paying late, as is including any penalties for his tardiness without issue. He hasn't mentioned anything about a grace period to you, so I wouldn't mention it to him. He knows where to find you if he wants to discuss timing. His check comes like clockwork, albeit a clock running a few minutes slow.
If YOU would like to proactively extend the grace period for late payments, I'd handle it at the next lease renewal. Something like, I like to relax the late payment timing after I develop at least 12 months of payment history with a tenant, or something similar. If he is month to month (sorry, don't remember if you said), I'd pick some milestone he's approaching (40 months, 6 years, whatever is soon), and offer the same relaxation of late payment timing due to that milestone.
Good luck!
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y
Don't change your processes for individual tenants. If you say rent is due on the first and he pays on the 5th, odds are you will change it to the 5th and he'll pay on the 10th. Leave it.
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Scott P.
Rental Property Investor · Indiana...mostly · Member since 2019 · 468 posts · 245 votes
7y
I think it's nice and thoughtful that you're considering this question. Based on what you're describing though, I wouldn't change anything. I wouldn't hold the late rent against them and I'd accept the fee.
I don't know your tenant but if one of my consistently performing tenants asked for the due date to be pushed back in order to avoid the late fee, I'd see if they could pay a month in advance - but if not, I'd find a way to grant the request.
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Kelly Iannone
Rental Property Investor · Orlando, FL · Member since 2018 · 301 posts · 354 votes
7y
@Cassie Chun good for you for observing this and feeling epithetic. I wouldn’t start this conversation as it should be the the tenants responsibility to seek this change however if they did, I would accommodate and have them pay the 1 month + 5 days, the due in the 5 moving forward. Or just have a 5 day grace period, that is ours in Florida.
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Kelly Iannone
Rental Property Investor · Orlando, FL · Member since 2018 · 301 posts · 354 votes
7y
I should add, at the end of the day I don’t care what day I get paid, it just needs to be consistent every month. It’s usually the 1st but no reason it can’t be another random day...same day every month.
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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
7y
@Kelly Iannone
"It’s usually the 1st but no reason it can’t be another random day"
Do I understand your business practice correctly. You allow your tenants to decide when they choose to pay their rent. That should be interesting with multiple doors. Should keep you busy all month tracking payments.
1 Reply
Kelly Iannone
Rental Property Investor · Orlando, FL · Member since 2018 · 301 posts · 354 votes
7y
@Thomas S. Current state, I wouldn’t have a problem with a alternative due date however you bring up a very fair point about the management of it with multiple doors.
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Karen Kerry
Property Manager · San Antonio, TX · Member since 2015 · 17 posts · 6 votes
7y
@Cassie Chun put them on a payment plan. In texas we have a form called hold off eviction for this form it costs $200 which we hold off from lock outs and removing items in the household that's equivalent to the amount of rent that is owed. All we ask is that tenants pay on time on the date they provided .
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Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Cassie Chun. No it should be the same each and every month. Starting to change things for individual tenants is not a scaleable business
2 Reply
Anthony Wick
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
7y
@Cassie Chun
I have experience with this exact scenario. Tenant was asking me to hold rent for a few days each month. I simply asked; “why?”
They said one of them gets paid once a month on the fifth of every month. They are fantastic tenants. Keep the place spotless. Never call for anything else. So I offered an addendum to the lease that states rent is due on the fifth of every month, with late fees beginning on the 6th.
For the past year there has been absolutely no problems. And they were so grateful and relieved that they have now signed a new one year lease. It’s worked out great for both of us.
2 Reply
Account Closed
Eastern Michigan · Member since 2018 · 83 posts · 144 votes
7y
@Cassie Chun
Don't do it. We had our best tenant ask to extend the date for just one month and we said yes no problem . Well now she pays a little each month. She's been there 7 years and so we don't really want to charge her late fees, but this was never an issue until we tried being really cool about one late payment. We had a similar situation with our other, much worse tenant. He always paid late so we extended the rent due date. Well, now he pays late past the extended due date. At least he does pay the late fee.
It really is a learning curve situation.
My advice, just stick to your rules on payments and it will save you headaches later :)
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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
7y
"She's been there 7 years and so we don't really want to charge her late fees"
If you are not charging late fees I would guess that your tenant has you well trained. You appear to have fallen off the learning curve. Too bad.
1 Reply
Charles Long
Real Estate Agent · San Marcos San Antonio, Austin · Member since 2015 · 28 posts · 18 votes
7y
@Cassie Chun As a landlord a good relationship with your tenants is more valuable than a little extra rent. I think your instincts are correct. Speak with your tenant. Don't extend the due date however, extend the grace period until the 5th. You will gain trust and increase the likelihood of a lease renewal when the time comes.
2 Reply
Cassi Justiz
Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
7y
It's a great idea, but I wouldn't reach out to them to make arrangements. If you start bending rules on this, it will be harder to enforce any other rules. Also, you don't want something to come up where you can be accused of giving one tenant special treatment over someone else. If your lease says it, then it should apply to all tenants. If they ask to change something in their lease, then you can address it at that time.
They may just be bad with budgeting their money. Some people are okay with paying late fees and over draft fees every month because it's easier than trying to budget.
1 Reply
Account Closed
Eastern Michigan · Member since 2018 · 83 posts · 144 votes
7y
@Thomas S.
Yes, our 7 year tenant does have us well trained. We aren't going to let future tenants do that and we won't be as flexible in the future, so we learned a lesson and that is our learning curve.
So glad you have it all figured out and can now spend your time writing snarky comments to newer investors. Must feel good to be so smart.
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Colleen F.Pro Member
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
7y
I would mention at lease renewal that it is always late and let them fill in the blanks as to why. If you want to do something then do it, that is your call, I wouldn't move the date now out of the blue.
@Account Closed You can reset the bar with that tenant. Send a reminder that you will be collecting late fees. You could also renew with a "discount" for paying on time. Rent is $50 less if received by you on the 1st. Same thing , framed differently.
1 Reply
Account Closed
Eastern Michigan · Member since 2018 · 83 posts · 144 votes
7y
@Colleen F.
Thank you, those are good ideas.
0 Reply
Bill Crow
Investor · Lewisville, TX · Member since 2012 · 106 posts · 103 votes
7y
@Cassie Chun
I wouldn’t guess at the reason. Time to ask directly.
If it is a payday thing and the 5th is consistent, then seems like an opportunity for a reasonable accommodation. If you choose to alter your lease, GET IT IN WRITING. Don’t leave it to interpretation.
I’v never needed to make a concession like this, but for an otherwise good tenant, I would at least consider it.
1 Reply
Ned J.Pro Member
Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
7y
Nope...... next question....
As for the "due date" @Kelly Iannone statement..... I think that she meant that as a landlord you can set the due date to whatever date you want..... it doesn't have to be the 1st....that's just the most common one. But in reality you could set ALL your properties to have their due date of the 12th...the 9th... whatever date you choose...... the 1st is just the most common. You just have to be consistent across all your properties and you don't change that date based on the tenant....you set it based on the date you want to be sure you have the $$ in hand and you stick to the fees when you don't etc
If the bank didn't want their payment the first week of the month, would we still insist on the rent on the 1st ? If I own it free and clear, it doesn't really matter what date I get the $$ as long as its consistent and not changed to fit any one tenant. I could have my lease say its due on the 15th, late fee etc on the 16th etc etc......
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