One of my policies is that if a resident has been late 5+ times in a 12-month period, we don't renew

One of my non-renewal policies is that if a resident has been late 5+ times in a 12-month period, or in their current lease, we don't renew.

I have quite a few residents who fall under this category right now, and I'm wondering, for those with the same/similar policy, do you call the resident and let them know that if they don't start paying on time you won't renew their lease? Or do you just follow the standard procedure of sending the non-renewal to them 60 days before the lease expires without a conversation?

For time and workload, I just send the No renewal. If they ask, I say we have the right to nonrenew and leave it at that. Most don’t say/push anymore because they already know why.

I and my predecessor always gave them a last chance. We would require they go month to month, and during however long you want to give them, they couldn’t have a late payment and default to non renew if they did. For instance I told someone I would only sign a month to month lease, you have to pay on time for at least six months before I offer a termed lease. Default will result in a non renew.

Communication fixes a LOT of problems. Call them and express concern as you wish to keep them as residents but inform them of the policy and let them know they are at the last chance to pay on time the rest of the lease to be able to avoid the moving costs they will face as they will be non renewed and have to move.

I would reconsider the policy to maybe be “sent to attorney “ - perhaps twice would mean non renewal. Late payments generate late fee revenue however if your property is strapped for cash at beginning of month and cant meet debt and expenses then thats another story.

I think your policy is more than fair. I personally would do a courtesy call at late payment #3 and let them know. I’ve done this before and the resident is always grateful and can usually miraculously start paying on time.

Do you want a renewal or do you want to find a new tenant ?
What is the economic cost of late....$1500 x 3 days x 0.01% per day cost of money or about $0.45
Yup, a late payment costs your company $0.15 per day.....
If they are otherwise good tenants, what do you think is a good thing to do ?
Feel free to ask your VP Finance to check my math before you spend $1000 on a turn and save $6.
Now, what is the operating cost ? The time the attention etc....$45 per late event for the attention follow up reminders etc.
That is why you charge a late fee.

Mike Powers ^^^^^ this. I completely agree with pushing out non payors. No pay no stay. However late payors are not equivalent to non payors

Megan Goodmundson yes. No pay. No stay. Late, take the fee and smile.
All that said, after three days, I would start ratcheting up.

Thank you for all the feedback! Ultimately, I want to have ALL the renewals, but we do have this policy. And the lease states that we can choose to not renew for any or no reason at all at the end of a term so technically we don't need to have them acknowledge it separately. Tricky when we're trying to keep occupancy up AND fairly execute the lease amongst all residents at the same time.

We have a long term tenant (now more than ten years), at one point in his early tenancy, he was chronically late, sometimes more than one month. We posted a ten day letter that if he did not get caught up, we would file for eviction. He has NEVER been late since. I guess we got his attention!

As an owner, of course I’d love it if everyone paid on time. But I’m not unhappy with residents who consistently pay late, within 15-20 days, as the extra income from late fees exceeds the cost and inconvenience of dealing with their late payments.
So we don’t look at taking serious action like filing eviction until somebody gets 30+ days delinquent. Of course, we sent out late notices etc. and 3-day notices to pay or quit later in the month, but we don’t start accruing legal fees until the next month starts.
As crazy as it seems, there are tenants who like to pay a couple of weeks late, complete with all the late fees, month after month.
The other consideration is whether the resident is communicating with you or not. A resident who acknowledges what they owe and makes a promise to pay, especially if they have a history of fulfilling their promises, gets more consideration than someone who just ghosts us and won’t respond. We try to work with residents, to a point, when they are having trouble, but if they don’t communicate, there's nothing we can do.
In your case, if the resident consistently pays within the month due and pays the late fees, we would probably renew them but would have a conversation reminding them that they could save a lot of money by paying on time.
If they are 20+ delinquent, I’d start early and let them know that they need to catch up or they're likely to face non renewal. The problem with getting more than 20-30 days behind is that, in my experience, it becomes less and less likely that the resident will ever be able to catch up, and at some point they may just give up and stop paying. Also, residents talk amongst themselves and if you don’t take action, you’ll soon have more residents getting behind because they think they can get away with it. So consistency is important for multiple reasons.

A. Have you thought about something like Flex where you get paid in time and the can pay Flex back?
B. At a new lease up we are seeing 20+ apps to get 1 lease due to poor landlord. Cost to turn vs slow payer....worth analysis

A. Have you thought about something like Flex where you get paid in time and the can pay Flex back?
B. At a new lease up we are seeing 20+ apps to get 1 lease due to poor landlord. Cost to turn vs slow payer....worth analysis

I always struggle with policies like this. What if the resident moves in, has a hard time financially for five months and then is able to straighten themselves out and pay on time for the last seven months of their 12-month lease? They’re otherwise a great resident. You’re going to non-renew someone who has a clean payment history for the last seven months? I know it’s policy at some communities, I just couldn’t see enforcing that to someone who now has a track record of paying on time. What would you do in that case? Seriously curious. I’ve always wondered how managers would handle that scenario when they have a 5x late/non-renew policy to enforce.

I always have those conversations with them so that they can be prepared.

I have always followed that if we have turned them over to the attorney twice for evictions proceedings in a 12 month period the second time we do not accept payment and proceed with the eviction. If they pay late, we just charge the late fee. Unless you have a very high demand property I would just take the late fees as additional income every month.

Knowing several residents who just consider the late fee part of the rent, I feel your pain! We also have residents who get paid in the middle of the month rather than a convenient time nearer when rent is due.

I agree with the others, though - the amount of time/energy spent on someone who is late (*and pays*!) is far less than the time/energy to re-rent. Since it sounds like consistency is the issue here, maybe reword the non-renewal policy to indicate the egregious late payer versus the regular in some fashion? Or say that late payments by themselves are not fully a reason to non-renew, but two late payments in a year lease PLUS any other violation is?

Another consideration is that rents are no longer growing in most markets or at least not at the clip they were. So, would you non-renew a late payer and incur turn costs plus the risk of replacing them with a lower rent lease? The ultimate hit to NOI and value may indicate that it is time to re-evaluate this policy

Whatever you decide, do it consistently so as to not appear to discriminate. Non renewing one year and not the next due to occupany levels could cause suspicion. Also, consider the amount of late fees collected. Do we non-renew just because theyre frequently late? Is this a
valid reason to give up this "other income" that affects NOI?