I have 70 tenants who pay their rent via ACH. 4 tenants have had their payments charged back to my account at one time or another, insufficient funds being the cause. Rent payment was made, either by me re initiating the transaction, or they would deposit the rent at my bank. I have not yet lost rent.

How many times would you deal with this before you non renewed their lease?

Choose your battles.

I'm with Jason on this one.

If a tenant has NSF once and it gets remedied quickly then I would watch them.

I've had the same tenant do that multiple times over the years he's been with us now. BUT he fixes it so fast that I have not been hit with any bank fees (I don't know how exactly he does that) and he pays the auto late fee if it happens to fall over the mark (I think twice.) I've had him on M2M since Covid as a result.

I think he's just a guy who does not watch his checkbook. He's a long-distance trucker with an invalid wife. Not that I feel sorry for him, but I can sort of see reasons for it.

I will only allow one charge back per 12 months. After that, they must pay in person at the bank via the old-skool method I used to use before going with auto-debit.

After the one bounce, if they are one DAY late during the next 12 months... I file. They've lost their 7 days of unofficial grace period that I allow normally. I'm also tightening down my standards on late pays: no more than 2 per 12 month period. I know this would make our old friend myob (aka "Unreal") cringe as he loves late fees, but I've found that as late pays are tolerated, there are also many other problems on the horizon that end up costing more time, headache and money.

Late fees may work well on other forms of debt where the debtor doesn't possess a tangible asset backing the debt. But when a tenant is in a $100,000+ piece of property, the real damages and messes they leave quickly devour late fees and more.

Anyone who allows a bounced payment and a non-payment in a 12 month period isn't going to be a good tenant long term. I've wrestled with that for years but finally come to the realization that good tenants simply don't have that many problems per year. Whatever the reason is--legit or not--is irrelevant. They either pay as agreed, or they don't. If they don't... time to move them along.

My lease states more than one failed or cancelled drafts are subject to lease termination at my discretion. I’ve never enforced it. I only have had two repeat offenders and have learned they don’t get better, if nothing they get worse.

Sisco,

I'm all for Zero Tolerance but stay in control. Control that benefits ME.

It sounds like you have better than average odds.

4 out of 70 ain't bad.

I'm not a Luddite but with all the banking tech problems WE have in our biz I can (cautiously) believe a resident's bank account or online payroll "got messed up". I KNOW from experience with OUR accounts it DOES happen.

Banking and the humans managing it HAS changed.

I also know it's a cheap, handy, "tell the LL something they will believe" excuse.

I also take into account the "dumbing down" of Americans. Scary how little our residents understand about money, payroll, and rent. They only know what shows on their phone screen. "Why did you put the rent back into my account" umm...WE did not. Your bank listed it cuz it bounced.

We must be aware and adapt to the lower mentality.

It's not big enough to evict. I am not bothered by it. I don't take it personally. Nobody died. My property is not damaged.

Turnover will cost me FREEDOM!!! and WAY more money than just sending a text and handling the NSF.

Wifey watches the accounts each day - it's her hobby! and we send a standard text which includes our $50 Bounce Fee + $5 per day late fee, and we will send the draft thru again.

So I just brought in $70 for the inconvenience.

If they respond to not pull another draft they have 3 days to Venmo or deposit at our bank.

If someone is a repeatedly bouncing we just put them on Venmo or bank deposit with a $10 Handling Fee for each Non-Autodraft Transaction.

SOME prefer that by choice because they cannot manage their bank account.

BTW PayDayPlan Rent helps them budget their money and saves us TONS of hassles.

BRAD

More information that should have been included in original post:

I have 4 current residents who have at some point bounced ACH transactions.

I have had others, who are now former tenants; their problems first surfaced with bounced ACH. This has me wondering if I would better manage by firing these tenants at lease end.

I am not considering eviction, I am considering non renewal.

The majority of tenants live pay cheque to pay cheque where they use defer rent to pay for car repairs or other purchases. Inflation has taken a toll on peoples ability to pay rent. Some tenants have poor money management skills where order food delivery services, beer or wine. Rental housing providers on the other hand have to fund to do repairs where most pay promptly pay contractors where tenants would not wait two weeks or month to have a repair done. Some tenants save up for house where the reality hits the first year where at first it is close to rent but when a furnace is required, roof or other expensive renovations or repairs they are often short of funds. In the apartment buildings it was $1,000 per day in operating expenses. The leftist tenancy advocate groups would go bankrupt in six months or less if they took over rental complexes. The worst run rentals are run by governments where often things break down then it took three months to fix the problem with the hot system. Private rental housing replace heating equipment that is old and inefficient.

ANY turnover costs time and money.

And with the current climate of applicants we need to learn how to deal with the imperfect.

My tenants don't have to pay via ClearNow, instead they can pay me an extra $20 and write me a check after the second opppps.

Maybe I am still taking it personally.

When someone is late I am not happy but I deal with it. Second time in a short period and I am getting a bit upset, which I convey to the tenant. If there is a third time I want them out.

Sure I can make extra money with late fees, but that isn't what I am wanting to do. The vast majority of my little empire pay on time, no bounces, no clawbacks, no excuses.

Guess I need to sit back and consider if I can let it be while collecting late fees. If I were allowed to collect late fees per day or make it more of a burn to them maybe it would be different.

One key element that has been overlooked here that separates Sisco from most of us: all of his properties are in one location. He rents trailers. Nice ones. But the downside of that is all of his tenants live right next door to each other. Easy for Bob to tell next door neighbor Mary that the LL "let him slide a little" last month. Then Mary tells all her lady friends. Next thing you know, half the tenants have decided to pay late.

Most of us have our units scattered, so what happens in one tenant's unit stays right there. Sisco has to run a tighter ship, or else the contagion spreads.

In the hood the devil you know is better than the devil you don't.