What Should You Do if Tenant is Late With Rent

What should you do when you realize, “My tenant is late with rent?”

You may have a really big problem or you may have a really great tenant! This article will explore how to know the difference between a problem tenant who pays late and a good tenant who pays late.

Let me start with a story. . .

When I first got into the business I got hot about tenants paying late. It certainly would be much easier if they would just pay me the money on time. This would spare me the time and effort of collecting.

I grew more and more frustrated when one of my tenants, who was living in my house from money due to an insurance claim, didn’t keep paying when the insurance company quit paying.

They kept telling me that their house wasn’t ready, like, “Hey buddy, I isn’t my fault I’m not paying your rent!” Nobody took responsibility and thus I lost out on a lot of money.

Truth be told, I didn’t know the difference between a good late payer and a bad late payer. Hopefully, you will shortly so you don’t make the same mistakes I made.

Good Late Payer vs A Bad Late Payer

Let’s take a look first at the benefits of a good late payer and what a good one looks like. First, think of how great it would be if you collected both your rent and your late fee every month.

Did you know that is what a good late payer does?

They know they are late and fully expect to pay the late fee for the benefit of being able to pay late.

At Evernest, we’ve had tenants who stayed years and consistently paid at or near the last day of the month. Can you believe it?

My point to them is that they should figure out a way to get one month’s rent and get ahead – I’ve even said to them, “You know we take money in advance of the first of the month, right?”.

It doesn’t matter, they will pay that day along with the late fee as long as they live there.

So how do you know if a late payer is going to be a good late payer? Here are a couple of pro tips:

My Tenant Is Late with Rent – The Good Late Payer

1. They pay predictably

I think this is the key indicator of a great late payer. They predictably pay on a certain day or a certain time of the month. Perhaps it is the last Friday of the month or the 15th of the month. Either way, they are very consistent about when they get the money to you.

2. They communicate when things change

I don’t have a problem with people being late. If something unpredictable has happened, it is most important to me that they tell me what is going on.

I think most people don’t do this because they are embarrassed. I think it is important for you to not look down on them if they are late.

Maybe someone got sick and had medical bills, or their car broke down. There are a lot of reasons a perfectly good tenant may be late with their rent. The important thing is that they communicate with you.

3. They live up to promises they make

Once someone communicates a date they will have the money for you, do they do it? If so, that is a great sign they are a good late payer.

4. They take care of the home

You know you can tell a lot about how well someone keeps the rest of their lives by the house they keep. If they take good care of the home, you can imagine that they probably take the same care with their finances and this is just a hiccup along the way.

I can’t recall ever having to evict someone who kept a neat and tidy house.

I’d use the above four items as a checklist if I was evaluating a late payer. If you can objectively answer to the tenant’s benefit in all four, you probably have a great tenant. You should rest a bit knowing that your rent will be paid.

My Tenant Is Late with Rent – The Problem Late Payer

Let’s dive into the problem late payer.

I wish I had a percentage of the good late payers to the bad late payers, but I don’t. I think it is important to know what a bad late payer is so you can get them out quickly before you lose too much money.

So what does one look like? It is basically the opposite of the four above, but let’s look at it anyway.

1. Their payments aren’t predictable in either date or amount

A bad late payer pays $400 here and $250 there and then brings in a big amount of $2000 at another random time.

Bad late payers are scraping money and when they do this they continue to fall further and further behind. They stay just enough in the grey area for you that they are hard to get rid of, but you spend a lot of emotional energy collecting from them.

2. They don’t communicate

If you attempt to call, text, email, and carrier pigeon and they don’t respond, then you can bet they are a bad payer. It is very frustrating attempting to get in contact with them.

3. They make promises and they don’t live up to them

When you finally meet them out in front of the house or call from your best friend’s uncle’s phone, they will tell you exactly what you want to hear.

They get paid on Friday and they are going to come to see you first thing. Then Friday rolls around and you’re anxiously awaiting their arrival and they never come. This is a sure sign of a bad payer.

“My tenant is late with rent” may turn into “My tenant never pays the rent!”

4. You don’t recognize your home when you drive by

Remember how you turned the home over to them? Perfectly manicured grass and professionally cleaned carpets?

Now you drive by and swear it can’t be the same house. If someone can’t keep their home life together, typically they can’t keep their finances together. They are directly related, but they are pretty dang close!

I spent a lot of time making poor decisions to get to the point of understanding what I’m sharing with you above.

If you’ve decided after reading this article that you definitely have a bad payer, please see our article on how to get them out. If you’ve decided you probably have a good late payer, congratulations! That is not entirely a bad thing.

The last thing I’d like to say is that we’ve had good late payers become bad late payers. Some things that may happen in their life that would cause this are:

• Losing a job.
• Getting into a toxic relationship – could mean romantically or hanging out with the wrong friends.
• Become sick for a long period of time.

Bottom line, just because you’ve decided today they are a good late payer, this doesn’t mean you need to take your hand off the wheel. Property management is a full-time business.

You owe it to yourself to manage your property like a business and when a tenant is late with the rent, understand if they are a good payer or a bad payer.

We hope this article helps you think through what to do when you look up and think, “My tenant is late with rent!”

Spencer Sutton

Spencer is the VP of Marketing at Evernest. He wakes up with Google and Facebook on his mind. Having bought and sold over 150 homes in Birmingham, Spencer gets a kick out of helping new and seasoned investors navigate the mistakes he made as an investor. Spencer is also passionate about his love for Michael Jordan and does his best to explain to the Millennials (who never saw him play live) how much better he was than LeBron. He loves to hang out with his wife, kids, and the world’s best black lab, Jett.