Looking for some advice on late fees. Does anyone use a graduated late fee schedule? Like five days late vs ten days, etc?
Thanks
Don’t do it. Use one late fee that happens on the 6th. Make it as big as the law allows in your state (normally $50 or so). Send the message that you don’t want the customers to be late, by giving them a giant fine. Most trailer park residents prioritize their bills based on late fees, with the higher the late fee, the higher the priority to pay on time. If you use smaller late fees, it sends the message that paying on time is not really that important, so they’ll pay somebody else first. The other problem is that graduated late fees require tracking and become extremely complicated.
So use just one late fee amount and make it as giant as the law will allow. That will maximize your collections being on time – and keep you record-keeping easy on those who don’t pay on time.
1 Like
Also make it crystal clear that continued lates will result in termination of their lease/eviction if your state allowes.
What you want is to create a understanding that payment on time is manditory ahead of all other lifes “necessities” without exception. Late fees should not be an option for tenants to pay late.
My opinion is that a couple of days without food or medecine is temporary and preferable to losing the roof over their heads. I have a no exception Pay me first or move policy. I explain to new residents that they need to establish an emergency
What you may need to do is actually have someone be evicted to send a message to all residents if you are having late payment issues. The fact is late payments are more work for you as the owner and needs to be eliminated.
Thanks. I just noticed the option in my Park Sidekick software so I thought I’d ask. I’m in California and I think I’m limited to about 5% of the rent but I’ll look further. Thanks again.
Thanks alot. I appreciate your advice. This forum is invaluable.
I’ve had a slightly different experience with late payments than Greg. In my park there are a few tenants who pay late every time, but always pay all rent and late fees before the scheduled evictions filing. Personally I don’t mind these tenants at all, I kind of like of them. The accounting inconvenience of someone paying late takes up a few minutes of my time at most, and then I get an extra $40 boost to my bottom line from each of them. I would personally choose that over non renewing a lease and kicking out a (late) paying tenant who wants to stay, and then dealing with rehabbing their home and trying to sell it.
I never cut a special deal for these residents though. There is a rigid bureaucratic structure in place where rent is due on the 5th, 3 day notices to vacate are placed on the 8th, and then evictions are filed as soon as possible.
I’m in California (yes, I know). I’m putting some feelers out now to see what other parks are charging for their LFs. A Tenant’s Rights group (GSMOL) out here is telling tenants that late fees should be at 3% of the lot fee. They say the law says the fee should be “reasonable” and basically only cover the administration costs. I’m thinking the fee should be at least 5% but we’ll see.
PS: We’re seeing a lot more late payments recently and I’m guessing it’s the “booming” economy. They always pay up by the 15th or 20th. I just want the fee to be commensurate with the hassle of taking one or two checks to the bank at a time.
Thanks!