Equity King, while I agree that you catch more flys with honey than vinegar, It costs me $48 in time and mileage fees to have my property manager go out a second time to collect rent from a late payer. I need to recoup that cost, so asking for $25 for 5 days late at least helps the extra expense.
Also, we made a mistake of not having a contract with the property manager up front (which we are in the process of doing now) and we want 1st choice on the tenants she has interviewed. The new tenants which are late on their 1st month payment are ones which we would not have liked to have in our apartment due to not only their attitude toward our unit (they asked when we were going to put an elevator in for our duplex which is one apt on top of another as the husband weights over 350 pounds and his wife had a receint knee replacement - before seeing the unit and moving in) as well as one of our long time tenants knows them and knows their character is not good to begin with. So, if we tell them we are going to charge a late fee, then we hope it will give them the idea to move out so we can find a more appropriate tenant.

Id recommend to really think long and hard about even including this "feature" on the lease for a few reasons. First, its threatening or intimidating effect is determined by how much you want to shell out of your pocket to enforce it. If they pay late and you want to force them to pay youd have to take them to small claims or start an eviction due to back pay. This will then almost guarentee that theyll stop paying since your evicting them and make you go through with the eviction thus incurring expenses over a ($25) late fee???? Its ridiculous. Give them incentives to pay ontime (I guarantee in the lease no rent raise in the 2nd year lease if always paid ontime on the 1st no later than the 2nd or give them a 25 reduction in the rent if they pay ontime or before. Remember, youll attract more bees with something sweet than vinager. Good Luck!!

Check your city's local housing department's web site. Another source is a real estate lawyer, but it will be expensive. Also, you can contact a local real estate association and ask them.

Check your city's local housing department's web site. Another source is a real estate lawyer, but it will be expensive. Also, you can contact a local real estate association and ask them.