Caution!

Winter always hits our renters with extra expenses - heat, Thanksgiving travel/food, Christmas presents, factory shutdown for inventory...

This year it's even worse. We are already feeling it with residents asking to delay Dec rent so they can buy Christmas for the kids.

Black Friday was a week later than usual and there are fewer paychecks before Christmas.

Only 3 weekly paychecks, or only 1 maybe 2 bi-weekly checks before Cmas.

Offer weekly rent to those who are too short on money.

And stay close on unpaid rent because Jan and Feb will only be worse with heat and credit card bills.

BRAD

Maybe, but think of all yer late fees,

new tenant applications and additional

dog(s) fees,

plus interest.

Kinda like a meat grinder on a Cattle Ranch.

Sometimes I'll go along with ONE delayed rent on a year with the following conditions:

We decide NOW on a future date we can both live with, ie December 15.

Tenant gives me an actual check for the full rent amount TODAY and dated TODAY - which I'll hold and deposit on the 15th.

It's understood that this is a one-time offer by me to "work with" the tenant and not a new payment arrangement.

If all goes as agreed I offer to a one-time courtesy waiver of the late fee.

I emphasize the check must be dated TODAY - no post dated checks.

In NJ and PA (probably most states) it's a crime to pass a bad check if it's not postdated.

A postdated check that won't clear is considered a promissory note and a civil matter, not a CRIMINAL matter.

Brad, are you just delaying the inevitable?

If they start the falling behind process, it is not going to get better. The weekly payment plan may "fix" things for a time, but I dare say, it will be short lived.

When you first screen these tenants to rent to them, what does their credit and payment history look like?

I suspect that those with good credit and payment history do not pull this stunt.

Brad, just to add, those that originally sign up for the weekly or biweekly payday plan, likely also show a not-so-great payment history, and certainly not-so-great decision making as it cost them a lot more in the long run.

My guess would also be, that if we were to look at statistics, these same tenants have animals, and even likely are claiming the ESA.

I used to have a tenant that would contact me every December to say she would be late with rent because of Christmas. Then she would pay three months ahead in January. I got used to it and allowed it.

If it was to happen today I would NOT allow it at all.

I tell them the same as mentioned above. It comes at the same time every year. If it is a one off I might allow it with late fees. Mostly I say find the money because being evicted over the holidays is going to be tough on you.

At lease signing, I emphasize that they must contact us by the first day of the month if there is any reason why we will not have the full rent by then.

So, when a tenant says they will be late and will be paying by a certain date, if it's more than a few days in the future, I tell them we will be giving them the required 5-day notice now (to start the clock ticking). But if they pay when they said they would, the notice goes away. If they don't, then we're already one step into the eviction process with no time wasted.

We don't allow a one time late or bounce. If they ask for a delay we move them to weekly

BECAUSE

they are telling us monthly is too hard for them to keep up.

MY judge says letting someone be late or bounce sets a precedent of SOP Standard Operating Procedure which HE must follow if this goes to court.

Allowed lates? Judge must allow lates.

No late fee? Judge cannot allow late fees.

HELP people keep their home by helping them stay on track because trust me, it only gets worse. This it the tip of the iceberg.

My stellar, responsible tenants have already paid December's rent.

In other news one of our handymen has just asked us for a whopping cash loan for "xmas for his non custodial kid, to buy s new mower, etc." He's very nice and polite and does good siding and simple manual work (very few actual construction skills) but he's starting a landscaping biz and going about it all the wrong way. AKA trying to start at the top.

Just checked my ledgers this morning.

14 out of 17 residential rents due on the first have been paid in full.

10 out of 11 commercial rents due on the first have been paid in full.

4 emails/texts went out reminding we need payment ASAP to avoid any issues with the lease. Gotta love Buildium's automated process. There's not even a decision for me to make: it just happens when they carry a balance past the due date.

While I like open communication, I do not tell my tenants to let me know if for any reason the rent won't be on time. Yes, they should tell me, but I'm not going to broach the topic to them. If someone calls or texts me and says, "Hey, rent is going to be late this month." My response is, "We need to get you on a payment plan to avoid any issues with your lease. What can you afford today?" Then we set them up for $X due today and $Y due over the next few weeks in either weekly or bi-weekly installments.

Always get something today. If they still have a paycheck coming, they'll have ways to get something. Even if it's just a couple hundred $$$s. Never accept a text or call in place of a payment. That establishes bad habits that usually get worse. Worst case they can go to the Pay Day lender... unless they do NOT in fact have a job, in which case they are lying to you and aren't going to pay you next week like they promise anyway. Might as well get that lie out of the way now.

When they let me know they are going to pay late, they are reminded that they cannot take the prompt payment discount (which they can take only if we receive their rent by the 1st) and that there is a late fee after the 10th. This way there is no confusion about how much to pay. Forfeited discounts and late fees go right to the bottom line.

WMH convinced me to start increasing the SD with every rent increase. It is in my lease now.

I am still considering how I will approach the topic with my other tenants.

Wish I had picked up on this back when I started adjusting rents annually. It would have made it so much easier now.

Wonder if I can use a waiver of notice around here?

To be honest when I get to the point of filing for eviction I rarely give an actual 10 day pay or quit.

I used to mark in on the original what the rent will be for the 3 years in advance, and I may go back to that in the future. But for the past few years, with rents rising unpredictably, I started asking tenants at renewal time what they wanted to pay. They almost always offer more than I expected. Here is my post from 11/26 in "$30 rent raise" thread...

Are you ready for a new way to approach rent increases??

In my best-selling book "Build Real Estate Wealth: Enjoy the Journey of Rental Property Investment" I cover tenant management and retention in depth. You can find it on Amazon, but here's a synopsis of this technique.

First, I've been doing this over 46 years, and I have always raised rents on everybody every year so I don't get behind. But when the market got hot beginning with COVID, it became hard to determine how much of a rent increase to ask for because rents were moving up so rapidly.

SOLUTION: At renewal time, send the tenants a letter that incorporates the following points: 1) It's renewal time, but we don't know what to charge you because rents have been increasing so much. 2) Do your own research on what you will pay if you move to a similar apartment, and get back to me by (date) with the amount YOU want to pay if you stay here. 3) Our research says the rent should be $XXXX, and we have rented units similar to yours in the past few months(or you are aware of apartments that have rented recently) for $XXXX. 4) If your offer is acceptable, we will renew your lease. 5) We do not need to raise the rent for an existing tenant as much as we will if we rent your apartment to a new resident. 6) Remember that your lease requires you to give 30 days notice if you are not going to renew, so we need to work this out soon.