Inherited tenant wants to pay cash
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Real Estate Broker · Omaha, NE · Member since 2020 · 329 posts · 203 votes
3yQuote from @Maria M.:
Hello everyone,
I have two inherited tenants who want to pay cash. They could do so without problems in the past, because the previous owner employed a property manager. The rent is over $1000, so I think mailing a money order is not possible. What do you think my options are if I don’t want to go pick up rent in person every month? Is my only other option to hire a property manager? Thank you!
- I would highly advise against accepting cash for many reasons, but here are a couple.
- 1. Security concerns: Accepting large amounts of cash can put you at risk of theft or robbery. If you're not comfortable handling cash, it's best to find alternative payment methods.
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2. Difficulty with record-keeping: Cash payments can be difficult to track and document, which can cause problems down the line if you need to provide proof of payment or rental history.
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3. Legal issues: Accepting cash can also make it harder to enforce rental agreements or pursue legal action if necessary. It's important to have a clear paper trail when it comes to rent payments.
As for alternatives, there are several third-party resources available that make it easy for tenants to pay rent electronically. Here are a few options to consider:
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1. Online payment processors: Services like PayPal, Venmo, and Zelle allow tenants to transfer money electronically using their bank accounts or credit cards.
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2. Property management software: Many property management software solutions offer built-in payment processing capabilities, making it easy for tenants to pay rent online. We use RentRedi.
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3. Dedicated rent payment services: Companies like RentMoola and RentTrack specialize in processing rent payments electronically, and often offer additional features like automatic payments and reminders.
By utilizing these resources, you can avoid the hassle and risks associated with accepting cash while still providing your tenants with convenient payment options.
60 Replies
- Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes3y
Buildium has a service called paynearme that allows tenants to pay in cash at walmart, walgreens, cvs, ace cash express, and 7-11 stores for a fee of $3.99. Signing up for buildium or other property managment software that includes the paynearme service will be significantly less expensive than hiring a property manager. I actually like getting cash via paynearme because once they've paid that way it might take 5 days to get it but there are no tenant chargebacks.
But you could just tell your tenants that you don't accept cash.
- Member since 2023 · 26 posts · 6 votes3y
Thank you for your reply Jill. Do you know if paynearme requires a business tax ID (which I don’t have) to open the account that would be mine, in order to give them the barcode to scan at CVS etc.? I think that is exactly how they were paying with the previous owner.
- 3yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
You can pick up the cash no problem or ask them to do a money order. Do you have etransfers in the US? In Canada, this can be done from any bank account and requires your email address. You set up a security question and answer.
- Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes3y
Couldn't they get two money orders? I had a tenant do that...
I assume they don't want any other electronic transfer method since it wouldn't be "cash" anymore. Is that correct?
Is it because they are unbanked?
You could open a bank account that has a branch nearby and have them deposit the funds into your bank account. I had a tenant do that also for many years until she finally decided to use Zelle. Yes, they'd have your bank account number which is why i suggest just opening another one. If your bank is there, so much the better.
- Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes3y
It'll depend on the lease. If cash is one of the allowed options and it is still in effect, you are pretty much stuck with it till the end of the lease. If they really insist on it, then just deal with it or tell them to deliver it to you by hand. Personally, I don't like dealing with the cash either so I don't allow that in the options to pay. At the end of the lease, create a new one and let them know before hand that cash is not an acceptable payment method.
- Member since 2023 · 26 posts · 6 votes3y
Quote from @David M.:
Couldn't they get two money orders? I had a tenant do that...
I assume they don't want any other electronic transfer method since it wouldn't be "cash" anymore. Is that correct?
Is it because they are unbanked?
You could open a bank account that has a branch nearby and have them deposit the funds into your bank account. I had a tenant do that also for many years until she finally decided to use Zelle. Yes, they'd have your bank account number which is why i suggest just opening another one. If your bank is there, so much the better.
Thank you David, I actually opened an account for them to deposit money, but I found out I need a business account for them to deposit $1500. Yes, they are unbanked
- Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes3y
Quote from @Maria M.:
Quote from @David M.:
Couldn't they get two money orders? I had a tenant do that...
I assume they don't want any other electronic transfer method since it wouldn't be "cash" anymore. Is that correct?
Is it because they are unbanked?
You could open a bank account that has a branch nearby and have them deposit the funds into your bank account. I had a tenant do that also for many years until she finally decided to use Zelle. Yes, they'd have your bank account number which is why i suggest just opening another one. If your bank is there, so much the better.
Thank you David, I actually opened an account for them to deposit money, but I found out I need a business account for them to deposit $1500. Yes, they are unbanked
interesting... Didn't have that issue myself.. I guess things have changed. What is the deposit limit? What about $750 biweekly? or $750 on separate days?
- Member since 2023 · 26 posts · 6 votes3y
Quote from @David M.:
Quote from @Maria M.:
Quote from @David M.:
Couldn't they get two money orders? I had a tenant do that...
I assume they don't want any other electronic transfer method since it wouldn't be "cash" anymore. Is that correct?
Is it because they are unbanked?
You could open a bank account that has a branch nearby and have them deposit the funds into your bank account. I had a tenant do that also for many years until she finally decided to use Zelle. Yes, they'd have your bank account number which is why i suggest just opening another one. If your bank is there, so much the better.
Thank you David, I actually opened an account for them to deposit money, but I found out I need a business account for them to deposit $1500. Yes, they are unbanked
interesting... Didn't have that issue myself.. I guess things have changed. What is the deposit limit? What about $750 biweekly? or $750 on separate days?
Please look at this thread https://www.biggerpockets.com/...
- Member since 2023 · 26 posts · 6 votes3y
Yes, I think the only option for them would be to snail mail two money orders at once (I think the limit for one is $1000). Is receiving rent by mail a hassle in your experience?
I will also look into Paynearme, as it’s used here in Florida, but I am afraid it requires a business tax ID on my end - Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes3y
Honestly, its been a while since I received a check snail mail because of Zelle or some tenants still dropping payments at my house. But, it was fine for many years.... The "old" ways still work... doesn't have to be "electronic..." I still get some bills in the physical mailbox... :)
- Member since 2023 · 26 posts · 6 votes3yThank you for letting me know. They would come to my address to drop off the rent, but I don’t want to run into them every month and start talking about rent being too high, etc…
Quote from @David M.:
Honestly, its been a while since I received a check snail mail because of Zelle or some tenants still dropping payments at my house. But, it was fine for many years.... The "old" ways still work... doesn't have to be "electronic..." I still get some bills in the physical mailbox... :)
I will consider the “snail mail” then :) - 3yErin ChurchPro MemberReal Estate Agent · North Augusta, SC · Member since 2017 · 254 posts · 233 votes
@Maria M.
Getting a business tax ID/EIN isn't very difficult. I have an LLC that is managing my properties. It doesn't make or lose money; it's there so my leases are the same and I can use it's info for 1099s. If you want to accept cash in the future, it may be worth looking into as paynearme seems like a pretty good way to go. I hadn't thought about the no charge backs which someone brought up.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
There are ways to safely accept cash payments, but it's too much of a hassle. Stand up for yourself and set limits on how they can pay.
If they insist on paying with cash, give them deposit slips and they can deliver the cash directly to the bank. They can also use a system like PayNearMe.
Direct deposit can be free/cheap, and it's really simple. Mailing checks or money orders is another option but that requires you traveling to the bank and there's higher risk of a payment showing up late or getting lost in the mail.
The DIY Landlord Book4.7248 Reviews - Member since 2023 · 26 posts · 6 votes3y
Quote from @Nathan Gesner:
There are ways to safely accept cash payments, but it's too much of a hassle. Stand up for yourself and set limits on how they can pay.
If they insist on paying with cash, give them deposit slips and they can deliver the cash directly to the bank. They can also use a system like PayNearMe.
Direct deposit can be free/cheap, and it's really simple. Mailing checks or money orders is another option but that requires you traveling to the bank and there's higher risk of a payment showing up late or getting lost in the mail.
Thank you Nathan. I know using deposit slips is common, but it seems one needs a business bank account. I don’t know if it’s a new rule, but I learned that the “hard way”: I was assured by Wells Fargo that if I opened an account with them, my tenants could deposit rent. When my tenants go try that, they get refused. Going in in person, I find out I needed a business account. Same with Chase.
- Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes3y
Even before covid she should be able to do mobile deposits... so no trips to the bank.
Meanwhile, she has already pointed out that regulations have recently changed and direct depositing seem to be have become pretty limited.
- Member since 2023 · 1 post · 1 vote3y
Is Ca$hApp an option? I had tenants in the past who used that, and the limit is $1500/day. It is hard for me to believe they are completely cash-only in life. There has to be another way that isn't so cumbersome.
- Member since 2023 · 26 posts · 6 votes3y
Quote from @Jen Glendy:
Is Ca$hApp an option? I had tenants in the past who used that, and the limit is $1500/day. It is hard for me to believe they are completely cash-only in life. There has to be another way that isn't so cumbersome.
Thank you Jen but I tried that too: l went into Walgreens to ask about it, and they only accept cash deposits for $500/week into a Cashapp account. I read something similar online too
- 3yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
Quote from @David M.:
Honestly, its been a while since I received a check snail mail because of Zelle or some tenants still dropping payments at my house. But, it was fine for many years.... The "old" ways still work... doesn't have to be "electronic..." I still get some bills in the physical mailbox... :)
I get postdated checks from one of my tenant. She sends one year's worth ahead of each new lease starting. I know postdated checks can't be used in some places, but we can. Then on the 1st of the month, I deposit that month's rent. Works well for both of us.
- Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes3y
Are you that concerned with bumping into your tenants? Otherwise I was thinking of some sort of secure box they could drop it in... Maybe is your attorney nearby to accept the payments?
I don't deal with the unbanked very much otherwise I'd ask them for you, see what they do. Its kinda crazy that people live this way, but I understand why.
- Member since 2023 · 26 posts · 6 votes3y
Quote from @David M.:
Are you that concerned with bumping into your tenants? Otherwise I was thinking of some sort of secure box they could drop it in... Maybe is your attorney nearby to accept the payments?
I don't deal with the unbanked very much otherwise I'd ask them for you, see what they do. Its kinda crazy that people live this way, but I understand why.
Hello David, unfortunately here in Florida unbanked tenants are quite common. I am not concerned about bumping into them, but I don’t want to give them my address. To drop rent at my house every month would be an opportunity for them to come say “hi”, complaining about petty things, or rent being too high, in a moment when I am not prepared for this discussion, and becoming way too familiar with me. Second, I don’t know what would happen in case of an eviction. They could show up here all angry, I think. Other than that, I meet them often. I will look into a drop box, thank you.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Maria M.:
Different banks have different rules.
The basic point is this: don't go out of your way just to make it easy on your Tenants. This is increasingly important as you add rentals and grow the number of Tenants. Set the rules and Tenants figure out how to abide by them.The DIY Landlord Book4.7248 Reviews - Member since 2021 · 39 posts · 5 votes3yI have the same problem with a property I just bought. The tenant want to pay cash for her portion so I sign up on Rentredi. I got this from biggerpockets resources.
- Member since 2023 · 26 posts · 6 votes3y
Quote from @Nathan Gesner:
Quote from @Maria M.:
Different banks have different rules.
The basic point is this: don't go out of your way just to make it easy on your Tenants. This is increasingly important as you add rentals and grow the number of Tenants. Set the rules and Tenants figure out how to abide by them.Thank you Nathan, I agree with your advice and will remember it going forward
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