Tenant Misses the 1st Again for Rent

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Tenant Misses the 1st Again for Rent

Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes

I have a great tenant in a great building. She was an inherited tenant that I took over 3 months ago. She is a Gen Z’er who has a professional job working in a hospital and is very nice, professional, and keeps her apartment meticulously clean and well maintained.

When I sent out my introductory letter and questionnaire she indicated she preferred electronic payment so I set up what she requested. The first month she paid the 1st of the month. Last month she didn’t pay the 1st so I sent her a reminder email on the 2nd and she responded right away that it had slipped her mind and in 15 minutes the electronic payment was in my account.

It is now an hour and a half from the 3rd and no payment. I’d prefer to simply send a friendly email reminder and avoid late fees and hard feelings. I think she could be a good multi year tenant and if this is my biggest problem with her would you recommend me simply sending a brief reminder tomorrow? I’m still a small enough landlord that this isn’t a problem.

Thanks!

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
5y

When you're a day late on your car payment, mortgage, or insurance, do you think the companies are wringing their hands and calling you to see what's going on? 

Act like a business.

My policy is that rent is due on the 1st. If payment is not received by 11:59PM on the 4th, a late fee is charged. If the entire amount owed (including late fee) is not paid by the 10th, then I serve them a 3-day Pay or Quit on the 11th. If they don't pay in full by the time that expires, I file for eviction with the court.

Do you know how many times I talk to the tenant during that process? None! I told them the rules when they moved in and they have a copy of the lease agreement in case they forget. Your constant reminders are more likely to make her want to stop communicating with you. She's an adult and can figure out how to set a reminder on her smart phone or set up auto-pay with her bank.

Think about how a utility, credit card company, insurance company, mortgage lender, cell phone provider, and any other professional company deals with this and then mimic them.

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    5y

    A tenant that doesn't pay on time isn't a great tenant. If it's a great building, it shouldn't be that hard to find someone that keeps the apartment nice AND pays on or before the rent is due. 

    What I would do: do not be overly nice: "Hiyeee, this is Alecia, hope you're having a great day! I noticed the rent didn't go in yet and so I just wanted to see if you were able to get into the portal OK, and just make sure everything's going great with you.." No. "Good morning. I checked the portal this morning and your rent payment was not made. Rent is due on or before the first of each month. I need an update immediately on the status of your payment. Thank you." 

    Any tenant not paying the rent on or before it is due is a problem. Cash flow - or lack of it - will make or break you as a landlord. Don't put up with any BS. There are 30 days in the month - 31 if you count January, March, May, July, August, October, and December. They have plenty of time to make the payment before it is due. Don't make their failure to live up to their responsibility your problem or responsibility. If you don't get any response, move on to your pay or quit procedure. 

    I certainly don't mean to sound too harsh, but the cold hard facts are that more landlords are shaken out of this business by not treating it like a business than any other reason. You provide a service and you should be paid on time, every time for your service. Whomever your mortgage company is won't care that this great tenant hasn't paid by the first, or second, or third, or... They want their payment, period. 

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  • Derrick Dill
    Investor · Hawaiian Gardens, CA · Member since 2015 · 308 posts · 386 votes
    5y

    Send her a reminder. Let her know that in the lease that she signed and is contractually obligated to follow, there are late fees going forward, you forgive her for these first 2 instances but.. If she forgets again, you plan to follow the lease terms (not sure what you have outlined).

    If she's an adult, she has to learn to follow deadlines and contracts. What happens when paying my mortgage "slips my mind"? the foreclosure process begins.

    4Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y

    When you're a day late on your car payment, mortgage, or insurance, do you think the companies are wringing their hands and calling you to see what's going on? 

    Act like a business.

    My policy is that rent is due on the 1st. If payment is not received by 11:59PM on the 4th, a late fee is charged. If the entire amount owed (including late fee) is not paid by the 10th, then I serve them a 3-day Pay or Quit on the 11th. If they don't pay in full by the time that expires, I file for eviction with the court.

    Do you know how many times I talk to the tenant during that process? None! I told them the rules when they moved in and they have a copy of the lease agreement in case they forget. Your constant reminders are more likely to make her want to stop communicating with you. She's an adult and can figure out how to set a reminder on her smart phone or set up auto-pay with her bank.

    Think about how a utility, credit card company, insurance company, mortgage lender, cell phone provider, and any other professional company deals with this and then mimic them.

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  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    5y

    @Account Closed above gives us a very clear look at the viewpoint of a tenant on this process.

    In C-class single-family in western Pennsylvania, if you have a tenant whose income is in the form of a biweekly paycheck who can budget their money and manage the rent bang on the first every single time, you are dealing with an anomaly. I do not charge late fees. All long-term tenants hate late fees, and when groups get together at work and start gossiping, I want my tenant to have to realize every time a coworker complains about paying a late fee that I don't charge them.

    I start chasing the rent five days after it is due, and I keep chasing it until I get a commitment to pay. I am utterly, completely shameless in this, and it dovetails into the rest of my personalized management strategy. "You know how I live, (insert tenant name). There's no pool of your money that I swim around in at my place. This whole business runs on borrowed money, and if I miss a payment the bank dings my credit and I'm screwed. I'm not saying that if you miss the rent date once or twice I can't manage the situation, but if I get caught in a cascade and a cash crunch, multiple tenants doing the same thing, I won't have the money to pay the bank. I've got to keep the wheels on the bus, (insert tenant name). What's going on?"

    It works for me. It would not be sustainable if I did not live right down the road from my tenants, if I drove a Porsche Cayenne up to their place, if I lived in a swanky house instead of half of a beat-up hundred-year-old duplex, if it wasn't almost always me showing up on handyman maintenance calls, if someone else called them other than your truly, or if I had more than 20-25 tenants in this class.

    Does it hurt my pride to chase rent? Do I occasionally resent my tenants for making me chase it? Not really. I see it as part of the business model.

    At this level, it's all about basic relationships with people who know you have more power than they do and a good deal of immediate power over their lives. This is America. We are all equal. Your tenants do not appreciate being reminded by their landlord that some are more equal than others.

    5Reply
  • Account Closed
    Rental Property Investor · Indianapolis, IN · Member since 2020 · 562 posts · 554 votes
    5y

    @Alecia Loveless

    When is the rent actually late according to the lease? Most leases give a couple days grace period.

    3Reply
  • Joe Chirdon
    Real Estate Agent · Harrisburg, PA · Member since 2016 · 159 posts · 82 votes
    5y

    Due on the 1st. Late on the 5th. 10% late fee after that. I remind tenants on the 6th. After she gets dinged with one or two of those, she will pay on time. If they don't pay by the 10th, I post a notice to quit on their door. 

    4Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    @Alecia Loveless

    For me- rent is due on the 1st, 5 day grace period then $50 late fee. I’ll take that late fee every month! Oh, and if no communication by the 10th it’s off to file an eviction I go.

    2Reply
  • Account Closed
    Member since 2021 · 237 posts · 153 votes
    5y

    @Alecia Loveless

    Quit working so hard, if she’s that good schedule the next 12 reminder emails for 9am on the 1st. A simple “reminder, 1st today! If you’ve sent rent already please disregard and have a great day!” Is what I use. Fire her a text letting her know you’ve scheduled reminders to help her out. Ask that she schedule a reoccurring event in her phone as well. Problem solved.

    3Reply
  • Raymond Mehling
    Member since 2021 · 20 posts · 18 votes
    5y

    The grace period is not to be used as an entitlement to be lazy and forgetful. Send her an email and Call her directly also. Explain that that grace period is for unforeseen circumstances. The rent is due on the first and using the grace period like this is not going to make me believe any issues that arise when the grace period might really be needed. you also have obligations that need to be met. I find text email and a phone call gets their attention. remember! you're not a pushover.

    0Reply
  • Curtis Mears
    Property Manager · Raleigh, NC · Member since 2014 · 728 posts · 596 votes
    5y

    @Alecia Loveless

    Have a process and follow it. For me, rent is due on the 1st, but the state graciously allows the tenant 5 days grace. If I do not receive the rent by midnight on the 1st, I send an email the next day telling them rent is due on the 1st, and they will need to include the late fee if not paid by the 5th. I wend another email on the 4th repeating the info. Many of my tenants waiting til the 5th to pay because my state has taught them.

    1Reply
  • Nolan M.
    Rental Property Investor · Mesa, AZ · Member since 2015 · 143 posts · 187 votes
    5y

    @Alecia Loveless.....Nathan G hit the nail on the head. Don’t stress so early in the month. Give your tenants a grace period and make sure you charge a late fee after the 5th AND serve the 5 day notice by the 10th. They’ll get the message. I have 9 tenants and a couple of them pay late a few times a year and I enjoy the extra $$! I don’t stress and I don’t even look at my bank account till the 6th.

    0Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    5y

     You may just be among the most reasonable and understanding people here while Also not being a pushover. If I rented from you I would have a ton of respect and do everything in my power to be a great tenant to you 

    LOL, I have one tenant who told a family member she thinks I'm the Antichrist. The family member wanted to use it against her so she told me.

    1Reply
  • Matthew Olszak
    Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
    5y

    "Slipped my mind" is a BS excuse - how does likely her largest monthly payment, due on the same day every month, get forgotten?

    Nonetheless, my response will depend on the property class. Like @Jim K. said, if you're in the class C space, the 1st of the month doesn't mean a whole lot. You'll get paid when they cash their paycheck which falls closest to that date. If you're A/B - you don't have to put up with that. Going forward, I'd suggest setting an automatic email to go out on the 25th, letting the tenant know rent is due in 5 days, and if they've already paid you appreciate their prompt payment. At least that way it alleviates the "I forgot" excuse.

    Lastly, keep on them. The 3rd will gradually become the 15th, then they won't have money on the 1st because they just paid 15 days ago, and on it keeps rolling.

    2Reply
  • Robert Beardsley
    Member since 2020 · 117 posts · 84 votes
    5y

    you could give her a reminder message again. this time with a warning that next month late payments will be taking affect

    0Reply
  • Michael Plante
    Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
    5y

    Due on the 5th 

    10% discount paid before that 

    Also we set it up so it comes out of their bank account automatically 


    no need for them to remember 

    1Reply
  • Val Csontos
    Rental Property Investor · Annapolis, MD · Member since 2014 · 214 posts · 140 votes
    5y

    @Alecia Loveless  I understand that you inherited the tenant and the lease. How ever this is how we avoid that from ever happening again.
    We advertise the place for let's say $1,500 per month. When we write the lease we write up the lease for $1,650 and we state in the next paragraph that if tenant pays on of before the 4th he or she gets a $150 discount off the rent. They always ask why the rent is written higher but when I explain that to prevent late payers from paying late they always understand it. I had one family that payed late every month for 3 years, so i got to collect 3 extra month or rent. But most never pay late ever........Please check to make sure this clause will be legal in your area. In my area here in Maryland I tested it about two year ago (I have been using it over 20 years now) when in court a judge asked to se my lease so he could see the rent amount for himself. He had no issue with it for our area.

    Good luck to you!

    Val 

    2Reply
  • Maria GuevaraPro Member
    Property Manager · Los Angeles, CA · Member since 2020 · 42 posts · 31 votes
    5y

    @Alecia Loveless I give my tenants up to 5 days to pay rent after rent is due. After that there is a 4.5% late fee. My tenants always pay on time. I don’t bother them to remind them that they’re late even, (they never are). I don’t have to remind them because they get an automatic invoice 5 days before rent is due. Today, one tenant paid 2 weeks in advance!

    0Reply
  • Alecia LovelessPro Member
    OP
    Member since 2019 · 3k+ posts · 2k+ votes
    5y

    Thank you all for the very insightful responses to my problem. I am fairly new to this and am still learning. My four other tenants are all paying early and the one who has been with me 4 years now always pays early with a bank check to boot!
    I will go back and review her lease momentarily and see exactly what it says about due dates, grace periods, late payments, and notices to quit before I send her an email in the morning. 

    Once again, thanks to everyone for the help and suggestions. 

    1Reply
  • Robert Johnson
    Member since 2020 · 22 posts · 42 votes
    5y

    The tenant could be testing you out.  Some people simply resent paying rent.  Regardless,  it must be collected. Instead of waiting to see if the tenant will pay, simply get in the habit of contacting the tenant.  They know the rent is due.  Many tenants now are simply taking advantage of the moratorium so if the tenant pays you're lucky.  In the meantime, don't be shy.  And don't be pretentious.   Just be straight and to the point.  "I am missing your rental payment for May 2021 in the amount of $1,000.  Please make your payment as required by your lease immediately.   Thank you. "

    1Reply
  • Chris A.Pro Member
    Investor · Suffolk, VA · Member since 2018 · 20 posts · 20 votes
    5y

    Do you have a payment collection system?  I use Cozy.co (learned of it through one of the BP podcasts).  For each property I enter the terms of the lease along with the tenant info, email address ect.  Once it is set up I don't think about it at all.  I get an email if they pay on time and a different email if they are late and the 10% fee is automatically added by the website via an email to the tenant and a reminder to pay.  I don't like for them to pay late and have to pay extra, but usually after one time it doesn't happen again, and they are incentivized to be on time.  

    The site has many other features that I use for listing the properties, screening tenants.  It is free for landlords, and they make money on the credit checks and background checks ($20 each)  when someone applies to rent your property. 

    0Reply
  • Tucker Cummings
    Investor · Raleigh, NC · Member since 2019 · 433 posts · 743 votes
    5y

    I have a tenant just like this. He consistently pays on the 5th. Only difference is he is getting charges a late fee and he happily pays it. Been that way for about a year.

    If they’re paying, you’re getting a premium on rent. Definitely recommend charging late fee though, as you’re giving the impression that you’re a push over. Since it’s already past due this month, I would say send an email reminder that says if this continues, you’ll start charging an X% late fee. Then implement it the following month.

    0Reply
  • Jaquetta T Ragland
    Real Estate Agent · Winston Salem, NC · Member since 2014 · 486 posts · 303 votes
    5y

    @Alecia Loveless what if you send an email the last day of the month and then again on the second?

    0Reply
  • Ashlee JankovichPro Member
    Real Estate Agent · Clarksville, TN · Member since 2020 · 12 posts · 5 votes
    5y

    Schedule an email on the first of every month reminding her that the rent is due. Set it and forget it!

    0Reply
  • Shawn L.
    Rental Property Investor · Natick, MA · Member since 2015 · 128 posts · 188 votes
    5y
    Originally posted by @Nathan Gesner:

    When you're a day late on your car payment, mortgage, or insurance, do you think the companies are wringing their hands and calling you to see what's going on? 

    Act like a business.

    My policy is that rent is due on the 1st. If payment is not received by 11:59PM on the 4th, a late fee is charged. If the entire amount owed (including late fee) is not paid by the 10th, then I serve them a 3-day Pay or Quit on the 11th. If they don't pay in full by the time that expires, I file for eviction with the court.

    Do you know how many times I talk to the tenant during that process? None! I told them the rules when they moved in and they have a copy of the lease agreement in case they forget. Your constant reminders are more likely to make her want to stop communicating with you. She's an adult and can figure out how to set a reminder on her smart phone or set up auto-pay with her bank.

    Think about how a utility, credit card company, insurance company, mortgage lender, cell phone provider, and any other professional company deals with this and then mimic them.

    This guy has the right idea. Summed up perfectly in the final paragraph.

    One thing to note is that whatever you end up doing, make sure you're compliant with your local/state laws. Some states (like MA for example) don't let you do things like offer discounts for on-time payments and late fees cannot be charged until rent is 30 days late. You don't indicate where you're located so I thought it was worth mentioning. Also if not TAW you'll have to honor whatever the late payment process is in the existing agreement (assuming they're enforceable in your state of course) until the lease term is up.

    1Reply
  • Forrest Faulconer
    Real Estate Agent · Oklahoma City, OK · Member since 2020 · 471 posts · 462 votes
    5y

    @Alecia Loveless

    I’m sure a late fee would help the tenant remember, they are there after all, not to give you more money but to serve as an incentive to pay your rent on time. If your tenant knows in the back of their mind they have a grace window and that you’ll remind them if late is due, it makes it easier to drop the ball. It’s not your responsibility to make sure rent is paid on time.

    1Reply
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