My Tenant is Always Late with Rent – What Should I Do?

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My Tenant Is Always Late with Rent…What Should I Do?

So you have a tenant that keeps paying rent late?

You may have a really big problem or you may have a really great tenant! This article will explore how to know the difference between a problem tenant who pays late and a good tenant who pays late.

Let me start with a story. . .

When I first got into the business I used to get really worked up about tenants paying late. It certainly would be much easier if they would just pay me the money on time and spare me the time and effort of collecting.

I grew more and more frustrated when one of my tenants, who was moved in my house from an insurance company, didn’t keep paying when the insurance company quit paying.

They kept telling me that their house wasn’t ready, like, “Hey buddy, I isn’t my fault I’m not paying your rent!” Nobody took responsibility and thus I lost out on a lot of money.

Truth be told, I didn’t know the difference between a good late payer and a bad late payer. Hopefully you will shortly so you don’t make the same mistakes I made.

Let’s take a look first at the benefits of a good late payer and what a good one looks like. First, think of how great it would be if you collected both your rent and your late fee every month.

Did you know that is what a good late payer does?

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They know they are late and fully expect to pay the late fee for the benefit of being able to pay late. At gkhouses.com, we’ve had tenants who stayed years and consistently paid at or near the last day of the month. Can you believe it?

My point to them is that they should figure out a way to get one month’s rent and get ahead – I’ve even said to them, “You know we take money in advance of the first of the month, right?”.

It doesn’t matter, they will pay that day along with the late fee as long as they live there.

So how do you know if a late payer is going to be a good late payer? Here are a couple of pro tips:

 

  1. They pay predictably – I think this is the key indicator of a great late payer. They predictably pay on a certain day or a certain time of the month. Perhaps it is the last Friday of the month or the 15th of the month. Either way, they are very consistent about when they get the money to you.
  2. The communicate when things change – I don’t have a problem with people being late. If something unpredictable has happened, it is most important to me that they tell me what is going on. I think most people don’t do this because they are embarrassed. I think it is important for you to not look down on them if they are late. Perhaps someone got sick and they had medical bills, or their car broke down. There are a lot of reasons a perfectly good tenant may be late with their rent. The important thing is that they communicate with you.
  3. They live up to promises they make – Once someone communicates a date they will have the money into you, do they do it? If so, that is a great sign they are a good late payer.
  4. They take care of the home – You know you can tell a lot about how well someone keeps the rest of their lives by the house they keep. If they take good care of the home, you can imagine that they probably take the same care with their finances and this is just a hiccup along the way. I can’t recall ever having to evict someone who kept a neat and tidy house.

I’d use the above four items as a checklist if I was evaluating a late payer. If you can objectively answer to the tenant’s benefit in all four, you probably have a great tenant and should rest a bit knowing that your rent will be paid.

Let’s dive into the problem late payer.

I wish I had a percentage of the good late payers to the bad late payers, but I don’t. I think it is important to know what a bad late payer is so you can get them out quickly before you lose too much money.

So what does one look like? It is basically the opposite of the four above, but let’s look at it any way.

  1. Their payments aren’t predictable in either date or amount – A bad late payer pays $400 here and $250 there and then brings in a big amount of $2000 at another random time. Bad late payers are scraping money and when they do this they continue to fall further and further behind. They stay just enough in the grey area for you that they are hard to get rid of, but you spend a lot of emotional energy collecting from them.
  2. They don’t communicate – If you’ve attempted to call, text, email and carrier pigeon and they don’t respond, then you can bet they are a bad payer. It is very frustrating attempting to get in contact with them.
  3. I promise text concept write on notebookThey make promises and they don’t live up to them – When you finally meet them out in front of the house or call from your best friend’s uncle’s phone because they have all your other numbers, they will tell you exactly what you want to hear. They get paid on Friday and they are going to come see you first thing. Then Friday rolls around and you’re anxiously awaiting their arrival and they never come. This is a sure sign of a bad payer.
  4. You don’t recognize your home when you drive by – Remember how you turned the home over to them? Perfectly manicured grass and professionally cleaned carpets? Now you drive by and swear it can’t be the same house. If someone can’t keep their home life together, typically they can’t keep their finances together. They are directly related, but they are pretty dang close!

I spent a lot of time making poor decisions to get to the point of understanding what I’m sharing with you above. If you’ve decided after reading this article that you definitely have a bad payer, please see our article on how to get them out. If you’ve decided you probably have good late payer, congratulations! That is not entirely a bad thing.

The last thing I’d like to say is that we’ve had good late payers become bad late payers. Some things that may happen in their life that would cause this are:

  • Losing a job.
  • Getting into a toxic relationship – this could mean romantically or hanging out with the wrong friends.
  • Become sick for a long period of time.

Bottom line, just because you’ve decided today they are a good late payer, this doesn’t mean you need to take your hand off the wheel. Property management is a full time business.

You owe it to yourself to manage your property like a business and when a tenant is late with rent, understand if they are a good payer or a bad payer.