Collecting Partial Rent There's another concept we've got to think about, which is collecting partial rent versus full rent.
Tenants will try to do this.
Let's say they owe $1,000 in rent.
Now they're a little short.
They'll send you $500 on the first or second or third or whatever.
Then what they'll do is they'll say, "I don't get paid until the next two weeks," and then they'll try to pay the other $500 in two weeks.
If you accept that once, that becomes the standard again and now that will start to happen each and every month.
Again, I'm not putting my foot down on this, because I know it can be difficult.
Don't accept partial rent, because you get into that process and it's going to continue.
Now, if a tenant's got $500 and they're willing to send it in, I typically would say, yes, get it, because half of the rent is better than nothing, quite frankly.
Explain to them that you don't accept partial rents.
Also explain to them that just because they're paying half now and half in two weeks does not waive the late fee.
The late fee is applied.
I would tell them, "Please send in the half rent.
The late fee still applies, and also we are going to start the legal eviction on the 10th or the 12th or the 15th of the month, if the other monies don't come.
We are not going to slow down our eviction process simply because we're waiting for you to pay rent.
" You as the landlord must move forward to do what you need to do.
Don't ever let the tenant tell you when they're going to send money in and then you delay your actions.
If your policy is to evict on the 15th, go ahead and do that, even if they paid some money, because you do not want to get into the habit of letting them tell you how to run your business.
Payment Schedules Payment schedules to catch up on old rents.
If the tenant is behind on rent and you want to establish some sort of payment plan, that is fine.
You can set up a payment plan and you can have the person pay $500 a week or $100 a week on the old balance, but the regular rent is due on the first.
If it's $1,000, it's due on the first.
Then we would expect that the following week $100, the following week $100, blah, blah, blah.
Okay? You can set up payment plans for old rent, but that does not allow them to skip their normal rent.
They can't just start paying $100 a week and then skip the rent on the first.
Make that so it is clear.
If you want to enter into an agreement with that person, make sure you document it in writing.
Send them a letter saying, "We agreed to the following.
" Then make sure they understand that.
Late Fees Late fees, first of all charge them, absolutely.
There are several options on late fees.
You can do a fixed amount, $50 or $75.
You can do a percentage, 5% or 10%, or in theory you could do both.
It gets a little complex.
I would suggest that 10% is probably the most that you can ever charge a late fee.
If you get above 10%, I think most judges would not permit it if you ever have to go to some sort of eviction hearing.
Judges will not allow late fees that are excessive.
Also, you won't even see it listed here, I do not like daily late fees for a couple reasons.
One is judges don't like them at all.
If you've got to the 20th of the month, in theory you could charge them 20 times something, whatever it is, $5, but judges don't like it.
Two, it's an accounting nightmare trying to figure these things out.
They sound good and you say, "Well, the tenant's going to feel more and more pressure as they build," but the accounting issues become really a nightmare.
If they start doing partial payments, how much do you say?
Tenants will try to do this.
Let's say they owe $1,000 in rent.
Now they're a little short.
They'll send you $500 on the first or second or third or whatever.
Then what they'll do is they'll say, "I don't get paid until the next two weeks," and then they'll try to pay the other $500 in two weeks.
If you accept that once, that becomes the standard again and now that will start to happen each and every month.
Again, I'm not putting my foot down on this, because I know it can be difficult.
Don't accept partial rent, because you get into that process and it's going to continue.
Now, if a tenant's got $500 and they're willing to send it in, I typically would say, yes, get it, because half of the rent is better than nothing, quite frankly.
Explain to them that you don't accept partial rents.
Also explain to them that just because they're paying half now and half in two weeks does not waive the late fee.
The late fee is applied.
I would tell them, "Please send in the half rent.
The late fee still applies, and also we are going to start the legal eviction on the 10th or the 12th or the 15th of the month, if the other monies don't come.
We are not going to slow down our eviction process simply because we're waiting for you to pay rent.
" You as the landlord must move forward to do what you need to do.
Don't ever let the tenant tell you when they're going to send money in and then you delay your actions.
If your policy is to evict on the 15th, go ahead and do that, even if they paid some money, because you do not want to get into the habit of letting them tell you how to run your business.
Payment Schedules Payment schedules to catch up on old rents.
If the tenant is behind on rent and you want to establish some sort of payment plan, that is fine.
You can set up a payment plan and you can have the person pay $500 a week or $100 a week on the old balance, but the regular rent is due on the first.
If it's $1,000, it's due on the first.
Then we would expect that the following week $100, the following week $100, blah, blah, blah.
Okay? You can set up payment plans for old rent, but that does not allow them to skip their normal rent.
They can't just start paying $100 a week and then skip the rent on the first.
Make that so it is clear.
If you want to enter into an agreement with that person, make sure you document it in writing.
Send them a letter saying, "We agreed to the following.
" Then make sure they understand that.
Late Fees Late fees, first of all charge them, absolutely.
There are several options on late fees.
You can do a fixed amount, $50 or $75.
You can do a percentage, 5% or 10%, or in theory you could do both.
It gets a little complex.
I would suggest that 10% is probably the most that you can ever charge a late fee.
If you get above 10%, I think most judges would not permit it if you ever have to go to some sort of eviction hearing.
Judges will not allow late fees that are excessive.
Also, you won't even see it listed here, I do not like daily late fees for a couple reasons.
One is judges don't like them at all.
If you've got to the 20th of the month, in theory you could charge them 20 times something, whatever it is, $5, but judges don't like it.
Two, it's an accounting nightmare trying to figure these things out.
They sound good and you say, "Well, the tenant's going to feel more and more pressure as they build," but the accounting issues become really a nightmare.
If they start doing partial payments, how much do you say?
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