Landlord Newsletter SPECIAL REPORT: #3
The LPA Newsletter, January 2004
Dear Fellow Landlord,
This is our 3rd issue of The LPA Newsletter. I hope you will find it informative and enjoyable.
We are working on a number of new special features to equip the LPA site with that I am very excited about. We are making strides in providing landlords with an arsenal of power which is centered around knowledge and organization. I'm hoping to make our new features available more quickly, so please accept my apologies if you have been waiting for them. You can read more about them in The "Coming Soon" area in this issue.
SPECIAL REPORT: #3
LEASE CLAUSE # 3, Late Fees
One of the most important elements of modern residential leases today is the Late Fee clause. In order to encourage timely rent and discourage late payments, I highly recommend you have a solid late charge clause. Having the clause in your lease is only part of protecting yourself against late rent.
The first step is to explain and warn the tenant about the late fee when going over the lease before signing it. I'll even ask the tenant not to sign the lease if they think that late payments are in their future. I also inform the tenants that I belong to a national tenant reporting bureau and have the power to adversely affect the tenant's credit, so.. "Don't mess up with your rent. It's not worth it." If the tenant values his credit and plans on buying a home someday, I remind them that it is very important to prioritize the rent payment and keep their credit clean.
How much should the late fee be? I feel late charges should hurt. I don't want to make it so high that a struggling good tenant will fall even further behind, but it should be a painful enough fee that the tenant will not want to pay again. Ever.
Many tenants who incur a late fee don't really mind paying it in their own good time. That's why it is important to also charge a Daily Late Charge in addition to the initial late fee. It gives the tenant an incentive to hurry up and pay the initial late fee before it grows into an even more painful hit.
Another item we include in our Late Charge clause is a Bounced Check Penalty. I usually make the bounced check charge the same as the inital late fee. I also prepare the tenant that if the rent check bounces, it will cause the rent to be late and they will be responsible for a late charge too.
I want to stress to you that the landlord protection clauses in our lease or any other lease are there to protect you, but sometimes you will have to enforce the lease. Many landlords are afraid to lose their friendly relationship with the tenants when it comes to enforcing the lease. Remember that this is your money we are talking about. This is your property they are occupying and you deserve to have a tenant who lives up to his or her agreement with you. Send the late fee notices and make the tenants pay the penalties. You have your own bills and you want your rent on time. That's why you rented to them. - John Nuzzolese
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Commentary on the LPA Essential Forms
by LPA Member Louis Cinq
There are a number of things I want to praise about the LPA, but for this article I will focus on what has made the biggest impact on my life as a landlord.
If I look back at my life learning the landlord business over the years, I would have to say the Essential Forms have been extremely helpful to me in managing all sorts of tenant problems. They have helped me avoid endless tenant nightmares that previously made me question if I was even in the right business. I would go to bed at night worrying about how to handle my tenant problems. The Essential Forms (mainly the LPA Lease which is what the Essential Forms are written to support) have changed all that.
"Success is dependent upon the glands -- sweat glands."
"Success is not a doorway, it's a staircase.."
"You have not lived a perfect day... unless you have done something for someone who will never be able to repay you.."
"True success is overcoming the fear of being unsuccessful.
"There never was a great soul that did not have some divine inspiration."
"Love one another and you will be happy. It's as simple and as difficult as that."
"How much did your last tenant problem cost you?"
Read and explain the LPA Lease (or any other lease you choose to use) to the tenant in person. It is proven to be far more effective that way. Not only will you be able to get to know the tenant better and get a feel of what this tenancy is going to be like, you'll also be able to continue screening the tenant as you cover various sections of the lease. After all, it is an instruction manual for how you want the tenant to behave in your rental property. - John@theLPA.com
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