Tenant late payment pm late disbursement pains to me
6 Replies
- 15hVaibhav PuranikPro MemberMember since 2025 · 106 posts · 57 votes
It's not a property management software issue. They need to hit that button themselves and doing it at arbitrary times will increase their work significantly. That's why they choose a date where most of the payments are in for most of their properties. I don't think you can avoid it unless you get another property management company which does this differently or you do the management yourself. If this is the only problem with this property management company then I wouldn't worry about it. I would simply solve it by having a little more reserve so that next month's mortgage payment can be done without an issue. This is the smallest problem you will encounter in real estate investing. It's not worth spending too much time on.
- Member since 2023 · 97 posts · 20 votes14h
Separate the two problems, because they have different owners. Problem one is the tenant: rent that arrives by different methods, on different days, clears at different speeds. We run 236 doors in Memphis on one payment method, written into the lease, same for every house, and that alone removes most of the 'still processing' fog. Problem two is your PM's policy, and that one should be in writing: what day they disburse, whether that date moves for weekends, and whether late rent triggers a second run or waits a full cycle. Ask those three questions by email. A fixed date with a documented late-rent run is reasonable. Random dates are not. Judge the answers, not the software.
Are you collecting late fees for the late rent?
My PM pays rent on the 10th by EFT so I get it the 10th. Checks for any other late rent or funds collected are sent the 2nd Friday after they are collected. (Except certified funds which are sent on the following Friday.). There is zero reason you shouldn’t have the money within a day or two MAX from the send date. And there’s no reason for that send date to be the 15th instead of the 10th. Plus you should be collecting late fees every time rent isnt paid on time.
I truly don’t mind “communicated” late pays with late fees. If I make 5% more for waiting a week or even two, that’s a pretty good return. It’s the silent late pays that bother me and the reason the rent gets increased if it happens more than once in 12 months.
Talk to some other local PMs and see what their policy is. Maybe you’re doing well for your market, maybe you’re getting hosed, I don’t know.
- Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes5h
Do you have a Management Agreement with your PM? It likely has language to the effect of you hired them to "manage" your property, so you have limited authority at this point. Who are the parties to the Rental Agreement...the PM and the tenant(s)? The rental agreement spells out late fees and when rent is considered "late". Your Management agreement may have specified a date or time frame for disbursement of funds to owner, but they certainly are not going to front funds to you that have not been received. Whatever the time frame it takes to clear tenant payments is what it is, the PM has no control over the bank, any more than you have control over how long it takes to clear with your bank after receiving from PM. It is up to the PM to charge the late fees per their agreement, however it certainly is poor practice if they are not doing so for legit late receipt per their rental terms. Most rental agreements state that "late" is based on either "postmark" or actual receipt of whatever acceptable forms they approve, but that has nothing to do with when those funds clear. The PM is not going to pay funds to you that he has not actually cleared from the tenant. Assuming his deposits are in a trust account with other client funds, that would be a serious violation of the law.
It is customary for PM's of any size to process their accounting and admin work in batches. Rents come in first week of month, typically getting deposited to Trust account same or next day (local law may have timeline as well). All late charge letters need to go out after X days. Usually after that point they are processing vendor payments through the second week up to the specified date range for owner NET distributions and reports. It takes time to process those reports for all Clients. Any rents that are actually late, or that took longer than usual for whatever reason to clear will usually sit until end of third week if you are lucky, or possibly until the month is closed out (locked in) by accounting to start the new month. Any vendor invoices that come in after NET distribution, this is where your reserve gets used, and then is reimbursed from next month rent income. They are not changing their process to accommodate an owner that is operating on a shoestring. You should have asked for the processing details before hiring the PM if timing was so critical. Many larger companies actually do not send out NET and reports until the middle of the FOLLOWING month. It takes a lot of time to process 1000 payments, along with all the other related issues of handling service calls, general inquiries, showings, signings, marketing, rental preps and repair projects, etc.
- 4hTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
It is fairly normal for your PM to send out your payments. Mine does it around the middle of the month (usually 2-3 weeks).
- 3hDivin KanyamaBusiness MemberAccountant · Seattle, WA · Member since 2025 · 630 posts · 264 votes
@Gp G. Your frustration makes sense—you need a predictable date when the money is actually available, not just a date when disbursements are “run.” I wouldn’t assume this is a software problem or that the tenant is late without seeing the timeline. I’d ask for a written breakdown for the last payment: when the tenant paid, when the funds became available to the manager, and when your payout was actually submitted. If they’re using ACH, seven to ten business days is longer than the network’s usual settlement window; the explanation needs to distinguish bank transit from any earlier processing or holding period.
Then I’d compare that explanation with your management agreement and request a clear written policy covering payout cutoffs, late rent, holidays, and expected deposit timing. Moving to the 30th doesn’t address the underlying delay—it changes the schedule. I’d first try to agree on a workable payout process, including how rent received after a cutoff gets handled. If the manager can’t provide a clear accounting or a schedule that fits your needs, I’d review the agreement’s termination and transition terms before deciding whether to change managers.
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