OfflineDo you own rental properties? If so, you are learning the importance of having your rents collected as quickly as possible.
The typical rental contract allows for a grace period of 3 to 7 days after the first. For example, if the rent is $700 and due on the first, the contract may allow for a 5 day grace period before the rents are due. Typically a late fee is attached to anything that is paid after this grace period.
Why not try this? Set the rent at $800 and give a $100 discount for paying on or before the first. Have late fees beging accumulating on the second.
You are still going to get your $700. You will be getting it on the first and not the fifth to the seventh. Your cash flow position will be strengthened.
Good luck and happy investing.
Roy Voeks
Official RE Coach
The problem with this approach is that you are most likely going to ask $100 more than the going rent in the area. In other words, tenants pretty much know the rates and are simply going to overlook your property if you ask too much.
This would be an expensive experiment if you were to lose a month trying to implement such an approach.
P.S. - Everything else is immaterial, irrelevant, and unnecessary.
You could also put your late fees at or around $250.00 and they will not be late very many times.
I was working for them now i work for me !
If you always put limit on everything you do, physical or anything else. It will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them.” - Bruce Lee
Just be careful to check with your city and state about late fees. Some states, like Vermont, prohibit late fees unless you can show you were financially harmed by the tenant paying late.
It's always great to have a good RE attorney review your rental agreements. Some cities layer on additional requirements. For instance, paying interest on the security deposit.
- Tom