It’s been a never-ending question I meet. Often, real estate managers and landlords/ladies face a hurdle in getting what they truly deserve from their tenants.
Some landlords have tenants that used to be great paying tenants but then something happened; a lost job, a death in the family, the car broke down, etc. and such caused the tenants to fail in paying on time.
Other landlords have tenants that signed the lease, paid the first month’s rent and then never paid on time ever again.
Don’t let your tenant dictate your policy
Tenants that never pay on time are a huge problem. How you handle the first late payment will dictate how your tenant behaves in the future. If you are lucky, the tenant will call you and say “Hey, I am paying late because . . . “. It doesn’t really matter what the reason is because the bottom line is you aren’t getting your money on time.
I want you to erase the following phrases from your vocabulary when dealing with a late paying tenant:
- That’s OK.
- Pay when you can.
- Catch up when you can.
- Not a problem.
- I understand.
- Any other phrases that indicate “no worries”.
I used to say “That’s OK. When can you pay?” in a very friendly, it’s-no-big-deal kind of tone. It hit me one day that NO, it’s not OK for the tenant to pay late. It’s great that he was calling me but I had to pinch myself every time I started to make it sound like it was acceptable for the tenant to not pay on time.
If you make it OK for a tenant to pay late, why should they pay on time?
Say this instead…
Instead, say something like “I’m sorry to hear that. What date will you be paying?” When they tell you the date, say “Give me a second and I will tell you how much your late fees will be so that you can include them in the rent.” I am not mean or rude but I don’t want to sound happy that they will be paying late. This is the first step to showing tenants that never pay on time that you intend to enforce your policy.
Assuming the tenant has explained why he is paying late, I ask the tenant if he will be able to pay on time next month. That is a valid concern, especially if he can’t pay this month’s rent until the middle or end of the month. If he says yes, I let it go and say great!
If he says no or isn’t sure, I ask what his plan is in the future for paying on time next month. For example, if he has lost his job, I ask if he has any family members or friends that can help him out. You want to break this cycle early. There are tenants that are used to doing it “their way”. They never pay on time, and it’s up to you to quickly make them understand that’s unacceptable to you.
Remember… You are running a business
I used to be too timid to ask these kinds of questions. It was easier to say “Ok” and not ask any questions. Unfortunately, I run across many landlords who just don’t want to “confront” the tenant or make him mad or don’t feel right asking those questions.
Remember, this is YOUR house! By not asking questions and making your tenant answer to you, allows the tenant to run your business instead of the other way around. Do not change the way you do business just because your tenant can’t or won’t follow your rules! Get rid of that tenant and find another one who will follow your rules. There is just no reason to keep a tenant that never pays on time. It’s bad for your bottom line.
Charging late fees
I chuckle sometimes because you do run across the occasional tenant who apparently fell asleep while I was going over the lease, and he acts completely shocked and insulted that you are going to charge late fees. If you are asked why you are charging late fees, remind your tenant that the lease he signed explains the late fees and the eviction policy. Sometimes they even get angry and say that’s not fair! I’m sorry but not paying your rent on time isn’t fair to me.
Many times they will ask if you can waive the late fees this time. You will have to decide what your policy is on this and I have heard lots of different opinions on this subject. Once a tenant has been with us for a year, we will waive late fees once a year but we note it in Quick Books so that we can keep track.
We do not waive late fees during the first year, because if you don’t train them from the start, you will have tenants that never pay on time.
Handling tenants that never pay on time
I was talking to a landlord the other day who had a problematic tenant. The woman moved into the rental house in November and has paid late every single month. This tenant is not very nice and has a new excuse every single time. The landlord felt bad for the tenant at first but that changed as time went on. The landlord didn’t charge late fees until the March rent was late and when she added them to the bill the tenant threw a fit! She asked me what I thought I should do.
I asked her if she wanted to try and work with the tenant and keep her or if she just wanted to get her out and start over. She was sick of dealing with her and just wanted to get her out. My advice to her was to follow her lease which spelled out how to deal with this situation.
Many times, a tenant that has been difficult will see that you mean business, that you are willing to get them out of the house and they will straighten up. This has happened to me and the tenant ended up paying on time and became that good tenant you’d love to have. Other times, the tenant doesn’t have any intention of paying on time and needs to go. Only you can decide if you want to work with this tenant or not. If you don’t just follow the process and the tenant will either move out or you can set him out.
Know the laws in Kenya or you will end up in trouble and with a tenant still living in your house that is not paying rent.
Dealing with problem tenants is part of my job. It is never fun but if you have a policy in place for dealing with them, it does make your job easier. I have learned the hard way over the years how important consistency is when dealing with tenants especially those tenants that never pay on time.
I hope you avoid the mistakes I and many others, have made over the years.