Many landlords have a tough job charging late fees. You probably want to show some understanding if someone is having a tough time. It’s also challenging to slap on extra fees for late rent if you have a good relationship with your tenants. And no landlord wants the reputation of being someone only interested in making a quick profit.
The problem with charging late rent fees is that tenants see you as a person, not a company. A late payment fee from the utility company—they blame the company. But getting a late fee from their landlord—they blame you, the person. So, you might be one of the nice landlords who let late payments side so as not to be the bad guy.
If you doubt whether you should be charging late rent fees, here are several excellent reasons you certainly should.
1. You need to take care of your finances
The hard truth is that a tenant’s rent is your income. In fact, it may be your only source of income. Many landlords rely on receiving payments by a specific date because they have bills to pay. Not being able to pay your bills on time means you risk paying additional costs in late fees. Aside from the cost, you might find that paying bills late negatively impacts your credit rating.
2. Late rent fees motivate tenants to pay on time
Nobody likes to pay out for things unnecessarily. Late rent fees are literally money down the drain from the tenant’s perspective. Tenants are more inclined to pay rent on time for fear of wasting that money.
3. It saves embarrassment
It is often awkward trying to track down your tenants and ask them for rent. It’s just as uncomfortable for them trying to avoid you. If tenants are aware of late rent fees, it will help maintain a healthier relationship between landlords and tenants.
4. Late fees prevent bad habits
If you choose not to charge late rent fees, the tenant has essentially gotten away with it. Even if it’s just a day or two after the grace period, there are no consequences for their actions. The following month it could be three or four days, and then a week. Letting it slide the first time puts you on a slippery slope where you’ll find it hard to prevent late payments in the future.
5. Late fees help tenants
Suppose a tenant lives from one paycheck to the next. If they fall behind on rent and other obligations, it becomes more challenging to catch up. They incur more late payments and may struggle to find the cash to make ends meet. Making tenants aware of late fees encourages them to pay closer attention to their budgets.
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