multifamily late fees
Apartment Late Fees
Apartment late fees are applied to a resident’s account if they pay rent beyond a pre-defined grace period. Generally grace periods do not extend beyond the first five days of any given month. And, apartment late fees are generally levied in an amount calculated as a percentage of the base rent and or as a flat fee.
Due on First Late on Second
Now technically rent is always due on the first of any given month. Despite what your grace period is rent is due on the first of the month and late on the second. That does not mean that you are applying your late fee but it does mean that rent collection procedures should be in motion on the second day of every month. You are building habits here and this is a good one to master.
A Word On Grace
I am a strong advocate for doing away with grace periods all together. I have never understood the appeal to use them. To me, it suggests that it is okay to pay late . Why would you do such a disservice to your respective business? Moreover, you have entered a binding contract and have agreed to provide some level of value in exchange for the monthly payment that will be made to you. So, in my head, you should ask for it on the first. And, define it as late on the second whereby you apply late fees.
Apartment Late Fees
I have seen several variations of late fee calculations. Presupposing rent is due on the first and late fees apply on the fourth – here are a few examples:
1. $50 on the fourth and $5 per day every day after until it is paid in full
2. $75 on the fourth. Another $75 on the tenth.
3. 10% on the fourth and $5 per day every day after until it is paid in full
That is just to name a few – there are very obviously hundreds of computations out there. The main point with penalties is behavior modification. Make the pain certain enough and people will very likely deviate away from it. Make it marginal and people will take advantage of it. Remember – for most of you there is a mortgage that has to be sufficed each month.
Your – advocating for no grace period – multifamily maniac,
M
Pic prop: flickr
