Rental Property Investor · Member since 2018 · 66 posts · 71 votes
If there is a market crash and if the USD keeps declining...
Then will you accept Bitcoin as a form of payment for your rentals, STR or LTR? We currently accept Bitcoin and Litecoin with no worry at all but we're curious what others think about this?
Technology is only advancing and a digital currency makes total sense. Especially one that's global for near instant, low/no fee, cross boarder payments. Makes more sense than a gold brick or a piece of paper thats just backed by a government that's hard to trust with money in the first place.
Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes
7y
@Account Closed I understand the idea, but whatever minimal transaction fees there might be are probably less than the complexity you are adding in valuing an asset and reporting it for rent instead of USD payment. You need to place a value on the crypto when you receive it and that's your taxable rent...not what it drops to 2 weeks later or goes up to etc. My point is this does not scale, the number of people who would pay that way is tiny. Fun in concept, irrelevant in practice. Think bigger, too much energy and time going into what is probably a few hundred or thousand in transactions.
Specialist · SF Bay Area · Member since 2019 · 20 posts · 6 votes
7y
How do you account for the fluctuations in value? Their value is still tied to the dollar or whichever currency is prevalent in your location.
For example, today you accept one bitcoin for one month's rent on a LTR. Before rent is due next month, the value of bitcoin decreases. Are you now expecting 0.8 bitcoin for rent? Or would you still be expecting 1 bitcoin? Your lease would have to indicate the current value of bitcoin and as of which date and time. And what if the value drops 20% 10 minutes after it is transferred to you?
Seems way too volatile for me. The dollar is pretty stable and for practicality purposes it fluctuates against other currencies, which most people aren't directly affected by. The only way I see for this to work is if you regularly traded currency and were profiting enough to make it worth your time. And if that were me, I'd separate it from my rental business and its money.
Rental Property Investor · Member since 2018 · 66 posts · 71 votes
7y
@Kevyn Miyata Well obviously you wouldn't accept Bitcoin if you didn't expect it to outperform the USD (which I do).
USD has been in a decline literally since it's inception. It may be "stable" but it definitely is not increasing in value that's for sure. You could very easily just ask for the USD equivalent of Bitcoin for that moment in time. You don't have to ask for .01 Btc you could easily ask for $150 Usd/BTC. Yes, it may drop 20%, but then it may go up 30%. In 10-11 years since it's inception it has not done anything to make ppl think it will not increase in value.
Adoption and technology are only advancing.
I don't live off of my income month by month so accepting Bitcoin is accepting the short term volitility with the possibility of a much higher ROI than cash and something a lot of individuals should do depending on their R/R. Younger generations do not care to carry cash or even trust the banks. Eventually people will move out of traditional investments. It makes sense in today's age to accept a different, seemingly better, form of payment.
Investor · Nipomo, CA · Member since 2014 · 366 posts · 401 votes
7y
@Account Closed Cool to see someone actually accepting BTC. I've been buying and selling it off and on since mid 2015, so I'd be more than happy to do the same if any of my tenants were willing. Problem is that it is hard enough to find someone to talk to about crypto, let alone a tenant open to paying in it. How did you find a tenant willing to pay in BTC/LTC? Did you solicit this or did they approach you?
Rental Property Investor · Member since 2018 · 66 posts · 71 votes
7y
@John Teachout When you're paid in Bitcoin for any goods or services provided then you'll owe ordinary income taxes, just as if you were paid in currency
Rental Property Investor · Member since 2018 · 66 posts · 71 votes
7y
@Jack Medford It is hard, but I've come to realize over the past two years it's become much easier to talk about even around my older relatives and colleagues. More people have at least heard of it now and I honestly think that talking from a perspective of also being a RE investor that people will atleast pay attention to me for a minute on the subject lol.
I don't ever push it or anything as payment I just always offer it. When approached for renting that isn't on any third party site I'll just casually tell them from the begining that I'll accept their payment in cash or Bitcoin. I had 1 guy so far who paid in Btc so it's not a lot of people yet but I still think it's pretty cool.
Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
7y
Would you accept euros, or pounds, how about UAE Dirham?
While I understand the neatness of Bitcoin, it’s nothing more then a different type of currency. You’re essentially just taking a commodity in exchange for rent. Which is fine, to each their own. It’s value fluctuates just like any other currency.
Maybe if this was 2010 and people wanted to pay me in bitcoin sure, back then it was 2 dollars a coin.
Rental Property Investor · Member since 2018 · 66 posts · 71 votes
7y
@Eric C. I wouldn't but that's because those fiat currency's are backed by those particular governments which I don't trust at all to keep their value. I personally trust the technology behind Bitcoin more so than any government backed fiat really. I know the USDs current role and position in the world and respect that highly and use that to my advantage but the tipping point has to come eventually.
I'm not a Bitcoin fanatic but it's hard to ignore the direction the world is heading. A paperless, more digital, economy is going to make more and more sense as time goes on. Banks are losing more and more trust with citizens and foreign Fiats are failing all over with little reason to think that'll change with the help from their governments.
I think it has more of a usecase than gold now and if you're trying to hedge against the declining USD then accepting Bitcoin even at its current prices may not be a bad idea.
Rental Property Investor · Chubbuck, ID · Member since 2018 · 532 posts · 466 votes
7y
The dollar is the worlds most stable and dominate currency in the world. Every single currency is compared to it including crypto. Crypto has a long way to go, probably a few generations will pass and then people will need to stop speculating with it. Now some country’s like Venezuela which have hyper inflation right now, they are starting to use crypto as it is more stable. We would have to have a major inflation issue like that here and that would be bad news for the entire country.
Rental Property Investor · Member since 2018 · 66 posts · 71 votes
7y
@Craig Jeppesen There will most likely be other countries in a similar spot as Venezuela. When more and more do have Fiat currency that experience hyper inflation then Bitcoin is a good alternative. I agree that It will be absolutely horrible for the US and entire world economy if that were to ever happen to the USD but that definitely does not mean it can not and will not happen long term.
When more countries experience what Venezuela has tied in with Bitcoins scarcity (21 Million I believe) then I think it shows Bitcoin still has a lot of room to grow. Accepting it now as payment just does not seem like a bad decision unless you're coming from an "I just don't understand it or care to" point of view. It's gotten to a point where I think it's riskier not to own a little with current world market and bitcoins track record.
I think people in my generation (millennial) just have a much easier time with the idea of something like cryptocurrency being more valuable and useful in the long run than our government backed paper. Even the block chain itself seems like an amazing way to keep track of transactions bc it makes it open to the public.
USD is king currently. I'm not debating that. I just see the use case with Bitcoin and think it's a great idea. I'll gladly keep accepting it as a form of payment for rent but I know that it's a touchy subject with a lot of investors right now.
Rental Property Investor · Cambridge, MA · Member since 2016 · 634 posts · 415 votes
7y
As it currently sits, I wouldn't accept Bitcoin or any other crypto currency as payment for rent. I view all cryptos as speculative at this point. Not interested in speculative modes of payment for what I consider to be a fairly stable asset class/investment strategy.
Rental Property Investor · Member since 2018 · 66 posts · 71 votes
7y
@David Barnett Dont get me wrong, if I was older even in my 40s (currently 29) then I wouldn't accept Bitcoin right now as payment and only own 1-2 to speculate. Even though I still believe its value will be higher long term.
I'm 29, have a good high paying job, have 2 rentals, and have a long term 50/50 play btwn stocks and Bitcoin. Bitcoin ROI much higher than my stock ROI by the way. All in all, I feel like my personal risk/reward is pretty high and I can stomach a drop in my net worth well, recover completely, and make it out ok.
Rental Property Investor · Cambridge, MA · Member since 2016 · 634 posts · 415 votes
7y
@Account Closed Fair enough, and more power to you if you'd like to accept it. From my perspective, cryptos are in their infancy and are more of a speculative play. The volatility in the swings on the trading prices would cause me considerable concern. Depending on the price the crypto is trading at during any given day, the return could vary greatly. I'm much more interested in stable and consistent returns that can measured, and aren't subject to crypto pricing and volatility.
It's an interesting discussion and could be a competitive advantage (attracting certain tenants that are in the crypto space) for a landlord if one lives in a "tech friendly area" such as Washington State, San Francisco, etc.
Rental Property Investor · Member since 2018 · 66 posts · 71 votes
7y
@David Barnett Its for sure not a market that you want to be in right now if you don't want to put up with volitility. That's why I love discussing things like this because I get to see a different perspective from people with different investment strategies and backgrounds.
There are even companies (Lolli is one I believe) that will now offer "Bitcoin back" for stays on VRBO booked through them. For crypto enthusiast who want to rent our beach vacation rental from us it may help us keep our occupancy higher being able to offer something like that. It seems like a growing niche for now if anything. I'm just curious to see where it goes and how other investors are perceiving it.
Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes
7y
@Account Closed I think this is all more to prove a point than anything else. I would accept chickens for rent payment if that was my only options. That being said. Anything you take in rent you need to track and report correctly, get turned into fiat ASAP..If you then want to TAKE the money you make and report and BUY crypto go for it.
We are very unhappy with all of the available property management software offerings out there...and since my day job is in software, we are building our own (since 90% of the crap in most of the others is hard to use and not anything we actually need, we use Rent Manager by the way and they seem to be one of the better ones.) Anyways, my point is we will run all of our own payment processing and we will integrate taking leftover gift cards for payments, crypto, ACH, credit card, cash (with pay lease) whatever, but all of it gets converted to cash and put into the bank account.
Your worry about the value of the USD is overblown. Unless you intend to SPEND in something other than USD, getting PAID in USD is what you want to do. Then put it into real estate or hard assets if you are worried about inflation...though deflation is going to be a bigger worry in the next decade I think.
Rental Property Investor · Member since 2018 · 66 posts · 71 votes
7y
@Richard Sherman Solid idea and reason to run your own payment processing.
I wouldn't convert my Bitcoin into USD and then go back and buy Bitcoin though. That would create unnecessary transactions and fees if accumulating some more Btc through rental income is a goal. I accept it because I personally believe it will outperform the USD regardless of the short term volitility. I accept it and then depending on the future market I will either sell it or use it as a form of payment.
Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes
7y
@Account Closed I understand the idea, but whatever minimal transaction fees there might be are probably less than the complexity you are adding in valuing an asset and reporting it for rent instead of USD payment. You need to place a value on the crypto when you receive it and that's your taxable rent...not what it drops to 2 weeks later or goes up to etc. My point is this does not scale, the number of people who would pay that way is tiny. Fun in concept, irrelevant in practice. Think bigger, too much energy and time going into what is probably a few hundred or thousand in transactions.
Rental Property Investor · Member since 2018 · 66 posts · 71 votes
7y
@Richard Sherman I'm definitely not trying to make a point. I'm genuinely curious what other reason estate investors think about this because even Congress is mentioning Bitcoin now and saying it is "here to stay" & "indestructible".
I'm 29 and living in a time where the world is changing fast in regards to technology and I also have a lot of real estate investing years ahead of me so I really want to know why or why not people will accept Bitcoin for their rentals or for a sale. To me, I'm looking at the future of either a global currency or a new store of value, so it's just interesting to see where other investors stand on it.
Rental Property Investor · Columbus, GA · Member since 2016 · 623 posts · 337 votes
7y
@John Mader, do you convert bit coin to USD at some point since most don’t accept it as currency? How would you pay a contractor for a make ready if they don’t accept bit coin? My insurance payments, property taxes, and all associated expenses come from my business account. I’d have to convert it to dollars to pay them. I’m also assuming there’s a transaction cost as well. As for the future of the USD, China is well on their way or so they want to be, to have many more in the world using their currency by 2025. While I think this is an overly aggressive goal, it highlights that other countries want to replace the USD with their country’s currency. While nation states remain, they will continue to seek an advantage over others. Hence, I’m questioning the future of bit coin as a replacement for any nation states currency unless using bitcoin they better their world position.
Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes
7y
@Account Closed I am a believer in some kind of crypto future. I own quite a lot of it and even used to mine it way back in the day (wish I had held it all!) but it has treated me well. Here is my point, it is JUST a method of transferring value, same as gold, chickens, cash, Iraqi Dinar, whatever..I do not CARE at all how someone pays me, I will try to make it as easy to be paid as possible, to make it easier for them, then I convert it to what I need (USD) and take it out or reinvest. From there I invest in whatever I want (crypto, pork bellies, real estate, whatever.) I guess my point is do not conflate what you are doing, you are taking one business (rentals) and taking what you make there and INVESTING it into crypto. That is fine, but it is functionally no different than getting paid in USD and then investing totally separate cash you have in crypto (aside from some minuscule transaction fees.) If you did a balance sheet on the transactions you would see what I mean, they have to balance :)
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
7y
There was a dude on BP who accepted btc for rent. I think he said for 8 months, waited a few years and cashed it in for $100k. Idk how the taxes went and I assume at long term cap gains rate. It is a bit volatile and maybe a small % one accepts as rent if they want to speculate.
Lender · NJ NY PA CT GA FL, Puerto Rico · Member since 2015 · 212 posts · 111 votes
7y
@John Mader hello! You have some techy renters :) I hold BTC and very much into blockchain, if you do not need immediate cash I see no reason not to get paid in BTC. The challenge is not with reporting taxes but making sure your BTC is safe, you understand how wallets operate; if you are LT holder of BTC - then def need a cold storage.