Nashville, TN · Member since 2016 · 28 posts · 10 votes
Leasing my first long term rental.
Tenant has asked if I can charge their American Express for the security deposit amount. The only potential issue I see with this is that they could potentially do a charge back at the end of the lease term (or earlier) for the amount. This is a higher end property and the deposit is at $3800/month.
Everything else checks out good for tenant- background, credit, rental history, income level.
This isn't ideal, but I don't have tons of other leads for this particular property at this price point, so I'm considering it to get it rented.
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
9y
He's likely asking to use amex becasue that's what works with Plastiq and gets him 3x the points. Those points can be worth a decent ammount (~1.3 cents) and a lot of travelers use it to upgrade to first/biz class tickets.
Plastiq/Tio are services were you pay the company via CC and then they send whoever a check. If you were to pay mortgage/rent with a CC normally it'd count as cash advance and you wouldn't get points and you'd pay fees AND interest starts immediately. If you go through Plastiq/Tio you pay a service fee but get the points...
Plastiq is more common, but don't take Visa cards anymore (a lot of travel cards are visa). Tio takes Visa, but isn't as popular. Look up travel hacking/manufactured spend and they will talk about this stuff...
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
I was worried about the same but since I allow online payment (via ACH) which can be charged back, I'd still do it.
But if you're really worried ask for certified funds. Who knows if they want to do it for the points or because they have no $
But when my tenants pay with CC I charge them 3% since it's expensive for me. Don't you have a cost that's billed to you for cc?
Flipper/Rehabber · Golden, CO · Member since 2013 · 590 posts · 319 votes
9y
I'd see no reason to even look into it.. They should have the money upfront, and if not thats a red flag. I can understand if they're trying to collect cc points or something, but its not worth the hassle for you. I'd say no, needs to be EFT, Cash, or check.
Nashville, TN · Member since 2016 · 28 posts · 10 votes
9y
Cody - yes I pay around a 2% fee and I would charge this to the tenant.
Kyle- normally you would be 100% correct and I just wouldn't deal with it. This is a long story and an "accidental landlord" situation. I wouldn't even own this rental if I could go back in time. Hell, this should be with a property management company but the margins are so slim that I'm having to self-manage.
I don't think I'm going to be able to find numerous tenants at this price point, so if I needed to budge a little and be flexible with this deposit, I'm okay doing it. Just wanted to ensure there was no HUGE blindspot that I'm missing.
Background check and job reference all came back good. I believe the person does have the means to pay for it based on other information provided.
Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes
9y
@Mark Hower don't compound one mistake by making another one. It is MUCH better to have a vacant property than one with a tenant with cashflow problems or a million excuses why they don't have your rent payment.
If you're going to be flexible, be flexible with the rental price and get a good tenant. it could be very short sighted if you are looking to get maximum rent. Only the sketchy tenants will rent places at the top of the market - because they can't be choosy; no one will take them! Better to slowly bleed negative cash flow than make a mistake onboarding the wrong tenant.
On a high end property, the applicant should have all the move-in costs saved up and loaded for bear. If it's a "CC points" thing, tell them all move-in costs must be in guaranteed funds (and add that in to your deposit to hold paperwork for next time). Good luck!
Nashville, TN · Member since 2016 · 28 posts · 10 votes
9y
also for others- what is the specific concern with using an Amex? Is it simply that if they don't have the cash on hand, then concerns with being able to pay rent?
Or are there specific concerns with using CC (like a charge back at move out)?
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
9y
He's likely asking to use amex becasue that's what works with Plastiq and gets him 3x the points. Those points can be worth a decent ammount (~1.3 cents) and a lot of travelers use it to upgrade to first/biz class tickets.
Plastiq/Tio are services were you pay the company via CC and then they send whoever a check. If you were to pay mortgage/rent with a CC normally it'd count as cash advance and you wouldn't get points and you'd pay fees AND interest starts immediately. If you go through Plastiq/Tio you pay a service fee but get the points...
Plastiq is more common, but don't take Visa cards anymore (a lot of travel cards are visa). Tio takes Visa, but isn't as popular. Look up travel hacking/manufactured spend and they will talk about this stuff...
Rental Property Investor · Pawtucket, RI · Member since 2017 · 47 posts · 37 votes
9y
Mark Hower Red flag ⛳️ 🔕❌🚫I wouldn't recommend do that kind of transaction, if they don't have to money in cash on in the bank is dangerous. But do what you think is right for you.