Readers Respond: Grace (Period) Under Pressure
I got the money!
My fabulous, wonderful, darling tenants finally came through with their rent check 48 hours before the grace period ended. They sent it overnight mail -- I don't even want to think about how much that cost -- to make sure they didn't miss the extended deadline.
Of course, I almost had a brain aneurysm in the process. We need the rent from our old condo in Adams Morgan in order to pay the mortgage on our new Capitol Hill townhome. To tide us over, I electronically transferred money from our savings into our checking account in the amount of the rent. Then, after I got their check, I would deposit it into our savings, effectively paying ourselves back.
It's a labor-intensive process and certainly not the smartest strategy. First, I lose out on the interest on that money -- which is probably only about 75 cents, but hey, that's one bag of Miss Vickie's Jalapeno Chips from the vending machine. And second ... I'm forgetful too and have yet to actually deposit their check now that my own bills are paid. (I swear it's on my to-do list today!)
Our savvy readers to the rescue! I've gotten several e-mails from you all with your strategies for getting the rent on time, and I'm including a few of the brightest ideas below. If you have any more tips or thoughts, just send them to me at muiy[at]washpost.com or leave them in the comments.
Ravyn: For the first part, toss aside that preconceived idea the rent has to be paid on the first. Why should it be? Because that's when almost all mortgage payments are due? My attitude has always been, I don't care when I get the rent, I just want to know when I'm going to get it.
My roomie and I have re-negotiated when his rent is due every time he's changed jobs. Currently he pays rent in two payments a portion out of each pay check, which works best for the way he budgets. A bit more than half on the 7th, the balance plus his portion of utilities on the 22nd. Works for him and works for me. I let him pick the dates and the split, because I want to make it as easy as possible for him.
On the flip side, if he picks the dates and amounts he can't really complain now can he?
Jessica Fagerhaugh: It takes some planning, but the best way to avoid late-rent problems from tenants is to get a month ahead on your mortgage for the rental property.
Next time you have some extra cash (tax refund?) pay an extra mortgage payment on the condo. From that point forward, each month you'll be paying the next month's mortgage payment. You'll also get an extra month's mortgage interest deduction next year.
We did this 10 years ago, and it's been a life saver several times -- when tenants went on vacation the first two weeks of the month after "forgetting" to drop a check in the mail, when tenants paid with out of state checks that took 10 business days to clear. Also helps when your tenants turn over and you go a month without any rent at all.
Michele Heller: When my husband and I lived on the Hill, we rented out our English basement. When we advertised the apartment, we would add $25 to the price. Then we would tell prospective tenants that they would get a $25 discount if they paid rent before the 1st of the month. Every tenant we had in eight years religiously paid on the 30th or 31st of the previous month. Sometimes I would hear them slipping the check in our mailslot at midnight to make sure they got it in before the deadline.
The "discount" works wonderfully -- you get the rental price you really want if you push up the advertised rental rate by $25 (or whatever "discount" price you plan to offer), but the tenant thinks s/he is getting a discount. It's a win-win for everyone.
Depending on the rent you charge for your condo and the demographic of the tenant (i.e. if it's someone to whom $25 doesn't mean much), it might make sense to offer a $50 or even $100 discount. Our tenants tended to be the lowest-of-the-lowest paid Hill staffers, so they were all about saving $25.
(Full disclosure -- Michele works at The Post, but she tells us she likes our blog and we are happy to believe her!)
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