Many leases give you the option of giving an initial late fee plus a daily late fee. I am totally against this for a couple of reasons.
- It’s hard for the tenant to keep up with what they owe on daily basis,
- Even if you have a property software to manage your tenants it tends to show too many transactions in my opinion.
What I started doing many years ago is charge a flat fee. I’ve noticed by charging one-time flat fee tenants usually make it a priority to pay much quicker because it’s HIGH.
There is an unspoken rule to charge a reasonable amount for a late fee. That reasonable fee according to some judges I have talked with is no more than 7% of the rent in any one month. Is this law? No. But I’ve seen many judges kick eviction cases out of court due to the extravagant late fees they were charging tenants which put them late on rent and they could never catch up.
That being said if the rent is $1000 I charge a $70 late fee. My due date is the first and rent is late on typically the 4th so they need to pay by the 3rd.
When I started doing this I noticed an immediate change late rents dropped substantially.