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
I just feel I need to back up what Roy has posted above. I learned this approach and have been applying it with my properties for almost 10 years. Not only has it worked for me, but when my property management companies learned this approach, they began suggesting it to other property owners, and it has worked for them as well.
There is a principle at work here that needs to be stated. If, as landlords, we are not getting what we want from our tenants, it is because we have not trained them properly. People, in general, respond to pleasure and pain. A discount for early or on time payment is the pleasure. The pain is if their rent was due by 5:00 P.M. on the 1st of the month, and they show up at 5:30 with a check, they have to pay $100 more. That gets their attention rather quickly, and if you decide to waive the $100 for a first infraction, they will love you for that, but will NEVER again try to get away with a late payment because they know they will pay big-time for doing so.
Dallin Wall
Real Estate Training Team
Forum Blog Location--A collection of my
"Best of" posts:
http://www.deangraziosi.com/blogs/dwall
Some places require a grace period with payment under the law. However the "discount" rent for early payment is interesting.