Here is the skinny. A nice couple with a young daughter recently applied for my listing. They passed the background checks, references and income requirements with flying colors, even though they are a single-income family, but neither met my credit score requirements. It appears the wife has just never really established any credit. The husband's credit score appears to have been hurt by student loan debt. The credit report shows he owes nearly $1,000 a month in total for all of his student loans and that several of the loans are in arrears. We discussed it and he told me that he has tried to work out reduced payment plans with the loan servicer but makes too much income to qualify for reduced payments but can't always afford to pay $1,000 a month and support his family, so he just started making lower payments. I sympathized with that situation and feel good about the fact that there are no other negative marks on his credit aside from those associated with the student loans. As such, after driving by the house they are currently renting and confirming it is well kept, I conditionally approved their application pending they would agree to an additional security deposit equivalent to two, as opposed to one, month's rent. They agreed, have set everything up to pay the security deposit and pro-rated rent for November through cozy.co and are planning to move in this weekend. Thereafter, recurring rent payments are scheduled to begin on December 1st.
Today, the wife contacted me and asked if I would be okay with them paying December's rent plus the $50 late fee on December 6th (I assume payday is on the 5th or 6th) because it would make things more manageable for them. However, she said they would make December 1st work if I wasn't comfortable with that.
Given the larger deposit, the upcoming holiday season, and their apparent willingness to do whatever I'm most comfortable with, I'm emotionally inclined to tell them I will waive the late fee just this once under the circumstances but that the lease will be strictly enforced moving forward. However, this will be my first rental and I realize that I could be setting a bad precedent by attempting to be nice here. With that in mind, I'm hoping to hear different viewpoints on how this situation should be handled. So now the question becomes, what would you do in this situation? Thanks for your input in advance.
Give an inch today and they will take a mile tomorrow. Charge the $50 but add it to their security deposit in savings. If they get their deposit back when they move out they will have a small bonus. Or buy them a $50 gift for the holidays.
Run the other way. I wouldn't have rented to them. Student loans are really easy to negotiate with the lender, assuming the lender is the government. I highly suggest you get out of this before they move in. They'll be nothing but trouble. Been there.
Also, if you allow them to pay late, regardless of late fees, you're waiving the due date in the contract. And yes, you're thinking, but your contract says that accepting late rent doesn't waive your right to collect it on the 1st - but what happens is, your behavior ends up waiving the due date by accepting it late.
I've heard of landlords who love late fees, as it's extra profit. But, my experience as a manager is that it never stops with one request. if they request a later rent payment date, it will be followed by a request for something else, and then by something else, ad infinitum. Oh, that noise you heard? We got a dog, that's okay isn't it? Oh, that's my sister who needed to move in with us, that's okay isn't it? The light outside our windows keeps us up at night, will you buy us some room darkening curtains?
I could tell you stories. But, over time and hundreds of tenants, I learned to believe the first red flag.
This particular instance is not black-and-white. However, experience with hundreds of units and thousands of tenants tells me you should pay attention to red flags.
Will this couple make a habit of paying late? Will they not pay rent and disappear into the night? Maybe not. In fact, you may have a dozen renters like this that manage to work out. But the one time it doesn't, you'll regret going easy.
Example: I just had a guy move into a house. He agreed to pay a $3,000 deposit if we allowed him to keep two large dogs on the property (brand new flooring throughout). We allowed him to pay that in two installments over a 30-day period. His first payment was due on November 15th and he called to say he couldn't pay it for at least another week. I could have waited the additional week. After all, he just moved in two weeks ago, is a really nice guy with a good job, and we already have a one-month deposit. What would it hurt to wait another week for him to come through? There's a very, very high likelihood of him making good on it and catching up but I have to mitigate the risk that he may not. I served him with a 3-Day Pay Or Quit and told him he could pay as agreed or move out. He magically came up with the $1,500 payment plus the $50 service fee. The best part? He apologized and then we had a great conversation about hunting, boarding his horses, how much he loves the property, and he even asked me about the sales market and indicated wanting to buy a home through us in a couple years.
Hold to the agreement, every time. Do it kindly, honestly, and fairly. Your tenants will respect you and you'll have fewer problems in life.