Is it okay for tenant to pay one years rent up front

[Doug Prahst]

So, I have an applicant for an apartment that I'm renting that will pay for one years' rent up front.

It's not an internet scam, I actually met this person. They live two houses away in a 1 bedroom and want a two bedroom.

When I asked her why, she said she's from Puerto Rico and that's what she's accustom to doing.

Are there issues or concerns with this?

[Jonathan Towell]

Umm, yes! Collect all that rent up front! Why would taking the rent money each month make the tenant any less risky?

Some people save up money and pay in advance. They'd just rather not worry about paying it each month. And, they don't understand or care about the time value of money.

But you are an investor, and you care about the time value of money. You know that the cash in your hand now can be deployed to other uses like more property, paying down debt, or even an interest bearing money market account.

I wish you the best!