Landlord Charging $400 in Excessive "LATE FEES" ??!! (Austin: for rent, mortgage)

[Melissa78703]

Originally Posted by austinizer

OK sajae90, imagine you're running an apartment complex in Austin. How would you structure the late fee?

My apartment complex is quite fair, IMHO. We're given a four-day grace period from the 1st of the month, so I can pay by midnight on the 4th of each month. After that, there is an initial $25 late fee. For every day after that, there's an additional $5 levied. This ensures that the resident has to pay a penalty, but the penalty isn't such that it forces a hardship on the resident.

My apartment management is quite forgiving–I accidentally stuck my rent check in the outgoing mail slot rather than the apartment drop-box and they waived the late charges. I think it helps that I have a good track record (three years +) of paying on time.

I know that my rent went down by $200, while the rents of other residents went up. Being very quiet, not having a large dog that annoys everyone by barking/pooping in common areas, and paying on time pays off. Apartments want to keep good residents around. Some, it was obvious they want o-u-t. Recently, they've enforced a $50 penalty each time a resident allows his/her dog off-leash in the common area. This has caused an inordinate amount of grousing from people who live to violate the leash law.

[sajae90]

Originally Posted by Melissa78703

My apartment complex is quite fair, IMHO. We're given a four-day grace period from the 1st of the month, so I can pay by midnight on the 4th of each month. After that, there is an initial $25 late fee. For every day after that, there's an additional $5 levied. This ensures that the resident has to pay a penalty, but the penalty isn't such that it forces a hardship on the resident.

My apartment management is quite forgiving–I accidentally stuck my rent check in the outgoing mail slot rather than the apartment drop-box and they waived the late charges. I think it helps that I have a good track record (three years +) of paying on time.

I know that my rent went down by $200, while the rents of other residents went up. Being very quiet, not having a large dog that annoys everyone by barking/pooping in common areas, and paying on time pays off. Apartments want to keep good residents around. Some, it was obvious they want o-u-t. Recently, they've enforced a $50 penalty each time a resident allows his/her dog off-leash in the common area. This has caused an inordinate amount of grousing from people who live to violate the leash law.

Wow, PM me that apartment, they seem pretty nice or at least considerate. And you know what, that is why your landlord have so many loyal tenants such as yourself, because they are willing to work with you and they don't slam you with crazy, excessive fees. They sound very reasonable..

[sajae90]

Originally Posted by austinizer

OK sajae90, imagine you're running an apartment complex in Austin. How would you structure the late fee?

Keep in mind you'll have some people paying habitually late, and there might be others who just stopped paying and might break their lease at some point and never pay. You have some new applicants for an apartment and have to decide, do I wait and see if this person will pay me eventually, do I turn the new applicants away, or do I evict the resident who doesn't pay and tell the applicants a unit will become available? If you're being nice and forgiving to one resident, will they come to expect it? Will other residents want the same treatment? Is it possible that by being a nice landlord, you'll encounter so much loss in revenue over time (some people not paying their rent, and you have to turn potentially paying applicants away) that you're forced to close your business, in which case every resident in the apartment complex might be forced to find a new place to live?

If i was a landlord, I would still charge late fees, just not excessive late fees. Now, eviction and late fees are two different things...I'm still not going to believe that a landlord suffered hundreds and hundreds of lost revenue from a tenant being only a few days late...heck, even 15 days late doesn't amount up to $200-$400 worth of revenue lost in less than a month.

Now, like I said before, I would still charge the late fee, but in a REASONABLE amount that won't push the tenant into more and more debt where they could never pay off their rent. So, I would charge the $25 after the grace period, then after that, $5 a day. If it reaches the 20th without payment, then I will file (only if they repeatedly pay late...not if it is their 1st or 2nd time). More negotiation will be done if I see the tenant is really working hard towards paying their rent.


See, I'm not saying that a tenant should not be charged some type of fee. Just fees that are resonable and won't actually force your tenant out rather than keeping them. no matter how many tenants you push out who are paying their rent late, and new tenants you bring in....you will ALWAYS have tenants who are going to be late....not unless you live in Beverly Hills where everyone is a millionaire. So pushing out yoru tenant just so you can make room for a new applicants is not always the answer...but being reasonable is.

[austin-steve]

I'm not saying that a tenant should not be charged some type of fee. Just fees that are resonable and won't actually force your tenant out rather than keeping them.

The problem with "reasonable" late fees is that they do not serve as a deterrent to tenants with sloppy payment habits.

I inherited an account from another property manager once that had a $10 late fee on the 5th plus $3/day thereafter. The weird lease also stated that eviction proceedings could not be initiated unless tenant had been issued a "15 day notice to cure delinquency", which I issued on the 5th of every month. But I couldn't post eviction until after the 20th.

Meanwhile, the tenant drug in around the 15th-20th each month and paid the $30-$45 in late fees because he preferred to pay rent with his mid-month paycheck instead of on the first, and the late fees were cheaper than pawning something to pay on time.

Upon renewal I cured that behavior with a new lease and the tenant never paid late again. He didn't want to pay $150 in late fees on the 15th, and I informed him I'd evict him before then anyway, so it was never again an issue.

Part of the purpose of late fees is to motivate tenant to pay on time. To make it more painful to pay late that it would be to figure out a way to come up with the money. Behavior modification.

Sajae90, I hope you own a rental property someday so you can be nice to your tenant and charge "reasonable" late fees. Once you do, I promise you'll quickly gain a new perspective about human behavior and how it is influenced by money.

Steve

[h152cc2]

Originally Posted by austin-steve

The problem with "reasonable" late fees is that they do not serve as a deterrent to tenants with sloppy payment habits.

I inherited an account from another property manager once that had a $10 late fee on the 5th plus $3/day thereafter. The weird lease also stated that eviction proceedings could not be initiated unless tenant had been issued a "15 day notice to cure delinquency", which I issued on the 5th of every month. But I couldn't post eviction until after the 20th.

Meanwhile, the tenant drug in around the 15th-20th each month and paid the $30-$45 in late fees because he preferred to pay rent with his mid-month paycheck instead of on the first, and the late fees were cheaper than pawning something to pay on time.

Upon renewal I cured that behavior with a new lease and the tenant never paid late again. He didn't want to pay $150 in late fees on the 15th, and I informed him I'd evict him before then anyway, so it was never again an issue.

Part of the purpose of late fees is to motivate tenant to pay on time. To make it more painful to pay late that it would be to figure out a way to come up with the money. Behavior modification.

Sajae90, I hope you own a rental property someday so you can be nice to your tenant and charge "reasonable" late fees. Once you do, I promise you'll quickly gain a new perspective about human behavior and how it is influenced by money.

Steve

So you got more money per month and that was the problem?

[austin-steve]

Originally Posted by cyclone8570

So you got more money per month and that was the problem?

Yes, that was the problem. Most reputable landlords don't want "more money", we prefer the agreed amount paid on time.

Steve

[sajae90]

Originally Posted by austin-steve

Yes, that was the problem. Most reputable landlords don't want "more money", we prefer the agreed amount paid on time.

Steve

Steve....please listen to your argument. "We don't want more money, I just want to be paid on time...." But the person is paying his rent PLUs the late fees, so he is making up the difference. You know he is good for the money. Why would you go ahead and evict him if he shows history of always paying his rent? and I would hope that you would give someone a 15 day notice before envicting them...that would be a generous thing to do to give them a chance to find new shelter. I can't believe that this is even legal in Texas. In MI, you have to give a tenant 30 days to find new shelter whether they owe rent or not. If he paying rent + fees on the 15th or before the cut off date...what is the problem????!! If you expect your renters to pay "on time", then why apply late fees at all? Why not just tell all of your tenants in the lease agreement, if you don't pay your rent on the 1st, you will be immeditely evicted...the end?

[sajae90]

Originally Posted by austin-steve

The problem with "reasonable" late fees is that they do not serve as a deterrent to tenants with sloppy payment habits.

I inherited an account from another property manager once that had a $10 late fee on the 5th plus $3/day thereafter. The weird lease also stated that eviction proceedings could not be initiated unless tenant had been issued a "15 day notice to cure delinquency", which I issued on the 5th of every month. But I couldn't post eviction until after the 20th.

Meanwhile, the tenant drug in around the 15th-20th each month and paid the $30-$45 in late fees because he preferred to pay rent with his mid-month paycheck instead of on the first, and the late fees were cheaper than pawning something to pay on time.

Upon renewal I cured that behavior with a new lease and the tenant never paid late again. He didn't want to pay $150 in late fees on the 15th, and I informed him I'd evict him before then anyway, so it was never again an issue.

Part of the purpose of late fees is to motivate tenant to pay on time. To make it more painful to pay late that it would be to figure out a way to come up with the money. Behavior modification.

Sajae90, I hope you own a rental property someday so you can be nice to your tenant and charge "reasonable" late fees. Once you do, I promise you'll quickly gain a new perspective about human behavior and how it is influenced by money.

Steve

Let me ask you this steve, are you a landlord or an apartment manager? You may have stated this already but I missed it. But if you are a landlord...be honest...are you seeing a nice profit from your complexes...I mean, does the rental property you owe make a net profit that is substantially higher than your expenses? I'm just curious.

[cmaxmor]

I think you are missing a big thing here, OP. Apartment management is a BUSINESS. The people who own/run an apartment complex want you to pay them. They don't want to have to chase you for the money, so that is why they impose penalties on you for being late. Being "good for it" isn't enough. I really feel like you just aren't accepting your part of the fault here. YOU signed the lease. The landlord is not responsible for your inability to find a regular paying job. It's not his fault! YES, apartment owners/managers want to make money. But they also, at the end of the day, don't want a pain in the a** to deal with that is late all the time. Hence, the fees. Geez.

[austin-steve]

You know he is good for the money..

The only thing I "know", is that late payers represent risk, and I like to reduce risk as much as possible. That is accomplished by consistent and effective enforcement of all provisions of the lease, especially the on-time payments agreement.

Good luck in your future endeavors and I hope you learn to read your contracts before signing.

Take Care