Managing Late Fees for your Rental Properties

                       Continuing the weekly FAQ’s related to property management this week’s entry will discuss late fees.  Late fees have to have strict rules in order to be enforced and ensure owners get their amount in time to pay the mortgage.  Working in Denver property management we have a number of tenants who are never behind on the rent and are always paying in full on time or early.  We have a number of tenants elsewhere that can get into bad habits of paying late.  The first step is to establish a strict schedule that isn’t unreasonable.  Rent is due on the first.  It is late if not paid by the end of the day on the 2nd.  Where you motivate people to get their payment in is the late fees for the 3^rd and 6^th day.  After the 3^rd the late fee is $50.  If not received on the 6^th it will be an additional $75 for a total of $125. After the 6^th you do a three day demand notice.  After the 3 days formal eviction proceedings commence.  7-10 days after that you’re in court and 7-10 days after that the Sheriff is knocking on the door.  We go over these expectations with every incoming tenant and 98% of them will never experience this.  We also offer online payment options and ACH options for those who like to have everything on autopay.  We of course allow everyone a “dog ate my homework” moment and prefer communication to silence if the rent is going to be behind this month.  Before implementing this strict timetable we had tenants paying late every month because they knew they could get away with it.  We cracked down hard and they paid several $125 fees in the beginning but haven’t paid late the last 7 months.  We’re understanding, and we have definitely waived a fair amount of late fees but with no system in place your tenants will attempt to walk all over you.  This set of rules has allowed owners to get their money on time each month and keep all parties happy.  There are some who let the late fees pile up, or pay late every month and include the late fee.  These problem tenants we remind of the eviction paragraph in the lease and often send non-renewal notices at the end of the lease.  Never put up with people paying late more than you have to. 

                      Need a property manager to collect your rent on time and in full?  Blue Olive Properties can help with Denver property management if you give us a call today.