“How did it get so late so soon?” Dr. Seuss

The state of California does not require a “grace period” on rental contacts. The rent is technically due on the due date and late after that day, unless stated otherwise in the contract .Most standard rental contracts have a clause listing the terms of any grace period.

WHAT MOST PEOPLE DO Most housing providers give tenants a three to five day “grace period” and list that on their rental agreements. I know that I use the form provided by the Apartment Owner’s Association, which allows you to fill in the number of days , and I use 5 days before a late fee is due. This is customary but not required. Most housing providers wait to file a “3 day notice to Pay rent or Quit” until the grace period has passed, but it can be done as soon as the rent is late.

BEST PRACTICE I am not an attorney. I am a real estate broker. It is always best to consult with your real estate attorney before moving forward because they are the experts. With the laws and requirements, especially in California, changing, as they have been lately, it is important to do everything by the book. If you don’t, you may end up going through a court proceeding taking several months only to find out that you have to start all over because of a small error that you made in the initial process.

RE-READ YOUR CONTRACTS. You should check the amount of days you give your tenants and then decide if you plan to continue this into the future. You may decide to go from a 5 day “grace period” to three days. You can give your tenant a “Notice of Change in Terms” if you decide on a change. It’s hard to imagine any prospective tenant having a problem with that issue and if they did that could be an indicator that they are planning to pay their rent late on a regular basis.

COLLECT THE LATE FEES. The reason for having the late fee in the first place is prevention. You want to motivate your tenants to pay rent on time. Your mortgage payments, utilities and other expenses need to be paid on time, so it is not an unreasonable request. If you waive the late fees after they are late, you are removing the motivation to pay on time. You have effectively removed no penalty for that tenant. If you enforce the late fee, it provides an additional incentive for the tenant to pay on time.

“Education is what you learn after you leave school.” Robert Kiyosaki

What we at PRS PROPERTIES CAN DO. We can give you a good idea of the current value of your building. We can suggest changes you might want to make before sale to give you an idea what type of building you would be able to exchange into. You may decide to stay in the rental business or you may want to move into a more passive real estate investment, such as a triple net or a DSL.. We are always available to chat. We can give you referrals for professionals, such as lenders, contractors, and engineers, so that you can decide who you feel best with. We can supply you with rent and sale comparable in the area of your properties, so that you know what rental values are in your area. It is important that you know the true value of your rental units, so that you can get them rented right away at market value, or at least as much as possible with rent control restrictions. We can look at potential purchases that you may be interested in to make the property more desirable, and maybe look at potential issues that an insurer might require you to repair.

If you should decide to sell your building, we can help you exchange into a larger or smaller properties. We can even help you move into something with less management responsibilities. We can also help with getting the paperwork together for a refinance if that is your desire. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other easy and inexpensive changes that might allow you to get a higher value. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We are currently looking for “as-is” properties and are willing to purchase with low rents, deferred maintenance or even with a problem tenant in place. We can offer a 7 day escrow and all cash at closing. Give us a call. We have also put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are currently in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 45 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.