Let's Talk Late Fees

[Aldo]

What do you charge for Late Fees?

Over time I've seen a lot of discussion about Late Fees. To my thinking, many are excessive and others are clearly driven by greed. I charge a flat $30 and believe that to be reasonable. What do you feel is reasonable? If your charge is more than, say, $50 how do you justify your charge when the national (non-landlord) average for Late Fees is in the 2-4% range?

[Dan Auito]

What do you charge for Late Fees?

Over time I've seen a lot of discussion about Late Fees. To my thinking, many are excessive and others are clearly driven by greed. I charge a flat $30 and believe that to be reasonable. What do you feel is reasonable? If your charge is more than, say, $50 how do you justify your charge when the national (non-landlord) average for Late Fees is in the 2-4% range?

Mine (contracts) have a discount if paid on or before certain dates, One couple religiously pays late every month and pays the extra $50 as if it was the standard rent. I don't claim to understand it but I do aim to collect it! :SM058:

P.S. I'm not sure how to justify it other than saying if they didn't want to pay the extra then they should pay on time, that is an option!

[OKRICHLAND]

OKRICHLAND here.
My late fees are $25.00. If the tenant drags his or her feet and pays the next month on time, that month is still considered late until that initial $25.00 late charge is paid in full. Same with returned checks. Each requires a delinquent signature.
To me that's reasonable, unless I have a tenant that I just don't care for, then it becomes a matter of how many of there signatures do I have on
there late notifications.
My leases' don't stipulate how many times this will be tolerated before
a breach of contract has been made.
If I ever had a tenant that I grew to dislike, say for trying to play me for a fool, then after there first signature I can go looking for a new tenant at my convenience and boot him out when I found a good one.
Of course legal timing and prudence would be taken into account on this matter.
I run high scrutiny on my tenants.
Better yet, I have gotten friends and relatives of the neighbors to
to move in.
It can be pretty embarrassing if your friends or relatives next door see you moving out for shrugging your responsibilities. :SM126:

[secoon]

When I was managing property although there was a late fee stipulation in my lease, one was never collected. Why? Because I never accepted late rent.. That is, it was never an option for my tenants to pay late. Set the tone at the lease signing, and if you have chosen well screened responsible tenants, you won't have late rent.

I saw (and see) late rent as an administrative nightmare, and bad business management, NOT as "added income".

Sean

[OKRICHLAND]

OKRICHLAND here.
Sean, I have never had to collect a late fee either, although I do like the idea of the money along with a signature.
It shows the judge/mediator that the tenant clearly understands the rules of the lease agreement.
As you well know, there are some tenants who really know how to work the system, they have been doing it for years and years and they've gotten very good at it.
I have been called on by several other landlords at different times to express my views, interpretation and opinions of their particular court cases before the mediator.
I've won every time.

I agree with Dan.
Set the price high; If it creates a reluctance to be derelict in the tenants responsibilities, GREAT!
If it doesn't pertain to the good nature of the responsible tenant then they shouldn't be offended by the clause.
I don't necessarily see a late payment as a bad tenant.
As we all know; Sometimes bad things can happen to good people.
If every landlord threw out every tenant that was late on a months rent
then the rental market would be in utter turmoil, totally unstable and ready to topple over at the very thought of someone loosing a weeks worth of work due to illness, emergency or a slow work week for a self employed tenant.
Unless their building is being used for drug trafficking or a shooting gallery
then I would hope that most landlords would agree with me when I say:
It's better to screen your tenants, show a little leniency when appropriate and be known as a nice guy, a landlord well liked by his tenants.
As I said; I have never collected a late fee.
The last time a tenant was late, it was because he couldn't collect until his boss was finished with the job they were doing,
(a few more days).No problem.
That was over a year ago.
Today his family still insists on inviting me into there home to sit and visit whenever I come around to collect rents.
All of my tenants feel the same way.
I haven't had a turnover in any of my houses in years and I've never lost a months rent.
Of course it's not all my doing.
I have a little help from you-know-who. :smile:

[Dan Auito]

In my travels I don't normally have cause to collect late rents either, however with the one set of tenants above it just seems like the thing to do! No sense in arguing over it when they drop it off without fail one week late every month with the extra $50 included. This is their new comfort zone and and I'm also comfortable with it as well. IN THIS CASE! :wacko:

[Nancy (MI)]

I charge a $25 late fee if rent is not received in my office on or before the 5th of the month. Rent is due always on the 1st and if not their rent is late. On the 2nd of the month I send the Tenant a 30 Day Notice to Quit ALWAYS. They have 7 days to pay the rent plus 2 days allowed for mailing and then I file for eviction.

The late fee charged on the 5th is in no way considered a grace period. It is just something I will allow the tenant to do UNLESS they are habitually late and then I will charge them a late fee on the 2nd of the month.

I only charge $25 because it is very important that the Judge respects you as a Landlord and not think you are the "Villianous Landlord" that the media portrays us to be.

To have a Judge respect you is far more important than trying to collect a few extra bucks a month.

A good Landlord/Tenant relationship goes a long way in this business. If the Tenant likes you and respects you, they will stay, and if you are persistant in your rules, they will pay on time.

$25 is a fair charge and the courts view it as such as well.

:biggrin:

[OKRICHLAND]

Guys, I value your input and I've learned something new every day;
now I must go to the men's room.

Gee, can someone tell me how to put a life size poster of a cartoon character in my posts

[secoon]

Rich, just click on the little icon that looks like hills on a postcard above, and enter the URL of the image.

Sean

[Aldo]

Though my notice procedure differs, I very much agree with Nancy's reasoning behind a reasonable late fee. Being reasonable will get the respect of both the tenants and the courts.

For those who have never charged/received late fees, I suspect we are talking different types of tenants. While some tenants struggle to buy a loaf of bread, others rely on outside sources for their rent, usually family or subsidies. Those sources are generally more reliable than an individual's income which can vary greatly in a short period of time.

[OKRICHLAND]

Rich, just click on the little icon that looks like hills on a postcard above, and enter the URL of the image.

Sean

I was joking Sean. :)