Rent due 1st and 15th??

Question

What’s up BP.

So I have decided to take one of my properties and manage it myself. I have a PM for the rest of my properties.

I have one applicant that meets all my screening criteria. Listed below

Income 3x rent (3.7 is where this applicant is)

Credit score of 600 or better (629 score)

Employed with same employer for 12 months (14 months)

No evictions (none)

No felonies (none)

No judgements (none)

I was talking to the tenant and they mentioned being able to pay the first or the fifteenth as his job pays on that schedule. And I thought why not allow this happen. Half on the first and half on the 15th.

Has anyone tried this? How did you word it in the lease? I would still want to charge a late fee after 5 days late.

Thanks

Will Fraser · Answer

Hi @Preston Quinn!  I do this on one of my properties that tends to attract bi-weekly earners.  IF you know about it on the front-end you can often bill a premium for this (for example, the property I'm thinking of rents for $650/month or $398 bi-weekly -- good for them good for me).

In general it's a good idea to break the rent up in your lease agreement as "$X due on the 1st and $X due on the 15th" and hav a late fee associated with both (i.e. due on the first, late on the 5th then due on the fifteenth and late on the twentieth) to add clarity.

Otherwise you could make the full monthly rent Due on the 1st Late on the 20th, but I tend to like the biweekly "due" rhythm for the tenants sake, because it reduces the tendency to have a "really important thing" come up that sucks up the other half of the rent for that month (you know, one of those things that is more important than housing?"

Joe Splitrock · Answer

I have done a payday payment schedule with a couple tenants, but only after they were struggling to pay on time. I would not sign up a new tenant under this agreement unless you increase rent some amount to account for it.

Theresa Harris · Answer

@Preston Quinn  I've done it for one tenant before.  It can be more work depending on how they pay.  Steven's idea is interesting where they pay the first month in full on the 1st and then pay twice a month.  It would also mean at the end of their lease, they can skip that last payment on the 15th.

Mike S. · Answer

@Preston Quinn

I had one property where the tenant moved in mid month and we decided to have the monthly rent from the 15th to the 15th. So still monthly rent but mid month. That was easier for him has he had some bills at the beginning of the month and that was giving me some cash flow mid month compared to my other properties.

Steven Foster Wilson · Answer

@Preston Quinn My tenants rent is due the 1st. But what Ive seen is some of them will deposit half on the 15th as "early rent" then the other half on the 1st. But it requires them paying the 1st month upfront.

Theresa Harris · Answer

At least it worked for 18 months and now you get another $50 out of it.

Joe Splitrock · Answer

Another option is to let him pay on the 15th and the 1st. So for September rent, he pays the first payment on August 15 and the second payment on September 1st. Same thing for him, but you get all your money by the first.

Joe Splitrock · Answer

In one situation you are getting paid for 30 days and the other you are getting paid for 15 days. It makes it far easier for a tenant to skip out and you have less money in hand. Under normal circumstances if I don't have a full months rent by the 15th, the tenant is being evicted. If you are allowing them to essentially pay late, they should be charged extra for the cost of money and the risk.

It is also kind of concerning if an applicant is asking to pay late when applying. That indicates they are living paycheck to paycheck. What happens when a car repair comes up or they are out of work for a couple weeks sick unexpectedly? Who do you think won't get paid?

Just be careful. Good luck.

Preston Quinn · Answer

@Steven Wilson

I have honestly never thought about suggesting this to all my tenants. That would almost fine you as the LL a heads up if trouble is in the air. If you don’t get the 15th “early” payment. There’s a chance that the on time payment is going to be late.  Not a bad way to do it.

Thanks for your time.

Sara K. · Answer

If they want to pay ahead, as other posters have said, that’s not a problem.  I only accept electronic payments (Cozy.co), so it would make no difference to me.

But I’m not accepting half of August rent on August 1, and then waiting until August 15 to see if they’re going to pay the rest. I fail to see how that could ever be a good business practice.

Rent due 1st and 15th??

Most Popular Reply