Get your rent EARLY

[JeanMiller]

For 5 years in landlording business, I have never filed for a single rent notice or evicition. The latest date I have received the rent was on the 1st. Many close friends of mine have asked me how.

I learned that people can be motivated by either making money or saving money, especially if it is easy. I also have very little time avaliable for property management; so I must develop a landlording system that requires minimum time and effort.

Assuming the rent I want is $795/mo, here are the rules for tenants:
1. Rent is directly debited on the 25th of the prior month, for $795 (as "discounted rent").
2. If pay between 1st and 5th, the rent is $895.
3. If rent is not paid by the 5th, eviction process begins.

Here is the advantage:
1. If tenants miss on the 25th, they still have incentive to pay $795 by the 1st to save $100.
2. If tenants pay between 1st and the 5th, you get $100 more in rent.
3. If they were late, you file rent notice for $895 (plus late fee, etc).
4. Lenders counts the rent income as $895 (good for refinancing).

It works really well for me. A couple times my tenants had missed on the 25th but they all chased me down and paid by the 1st. Not bad. Of course, the rule of thumb is to screen well. I hope you can benefit from this.

Inspiration Quote of the week:
"Success and happiness are not destinations, they are exciting, never-ending journeys." - Zig Ziglar

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Jean
MotivatedLeads.com

[DSutter]

For 5 years in landlording business, I have never filed for a single rent notice or evicition. The latest date I have received the rent was on the 1st. Many close friends of mine have asked me how.

I learned that people can be motivated by either making money or saving money, especially if it is easy. I also have very little time avaliable for property management; so I must develop a landlording system that requires minimum time and effort.

Assuming the rent I want is $795/mo, here are the rules for tenants:
1. Rent is directly debited on the 25th of the prior month, for $795 (as "discounted rent").
2. If pay between 1st and 5th, the rent is $895.
3. If rent is not paid by the 5th, eviction process begins.
This is where the wording of your lease or rental agreement becomes important. In court you run the risk of the "discount" being recharacterized as part of the late payment penalty and in some areas it would be considered excessive.

Here is the advantage:
1. If tenants miss on the 25th, they still have incentive to pay $795 by the 1st to save $100.
2. If tenants pay between 1st and the 5th, you get $100 more in rent.
3. If they were late, you file rent notice for $895 (plus late fee, etc).
4. Lenders counts the rent income as $895 (good for refinancing).
A lender might do that unless they actually examine tax returns and stated loans are falling by the wayside fast.

[Aldo]

Jean, that's a great plan and I'm glad that it works for you, but it's not for everyone. Your early payment discount has been shot down in the courts of several states in which late fees are limited or prohibited. Those state's courts regard that discount as a reverse late fee. When you think about it, I think you'll agree with that.

Again, I'm glad it works for you, but a $100 late fee would be considered excessive in most states. Locally, the courts reluctantly will allow a $50 late fee if justification is offered by the landlord. If you can get the $100, that's great but you may not get it if/when an eviction goes to court.

[Tom CT]

Here in CT the courts consider the discounted rent the actual rent. The rule of thumb here is 5% for late fee's. Some propertyowners go higher but the courts award reasonable late fee's which is generally 5%.

[InvestorJoe]

The best way to get your rent on time, every time, is to properly recruit, screen and TRAIN your tenants.

[Dan Auito]

Amen!

[Terry CA]

Illegal in CA....

[Rich_in_CT]

That's not legal in many states, anyone considering this plan should check their local laws.