I am a new landlord and am listing my first house for rental. There is an applicant who is self employed and wanted to pay me 1 year rental in advance to resolve my concerns about his income. Can I accept the prepaid 1 year rent? is that legal? I am at bellevue, Washington state. Thanks in advance for you suggestions and insights.
I am a new landlord and am listing my first house for rental. There is an applicant who is self employed and wanted to pay me 1 year rental in advance to resolve my concerns about his income. Can I accept the prepaid 1 year rent? is that legal? I am at bellevue, Washington state. Thanks in advance for you suggestions and insights.
Thanks
Yes you can accept rent in advance. The fact that he wants to pay you all of this in advance due to his poor credit is the bigger issue here. How bad is his credit? Are you sure you want him as a tenant?
Thanks James for you answer! His credit score is 618 and his wife is 803. He filed bankruptcy (chapter 7) at 2010 and has no criminal history and eviction. They will live with 2 children
If that all checks out when you run his background he sounds like a good tenant to me. I would not be worried if I were you.
I am a new landlord and am listing my first house for rental. There is an applicant who is self employed and wanted to pay me 1 year rental in advance to resolve my concerns about his income. Can I accept the prepaid 1 year rent? is that legal? I am at bellevue, Washington state. Thanks in advance for you suggestions and insights.
Thanks
Yes you can accept rent in advance. The fact that he wants to pay you all of this in advance due to his poor credit is the bigger issue here. How bad is his credit? Are you sure you want him as a tenant?
I am a new landlord and am listing my first house for rental. There is an applicant who is self employed and wanted to pay me 1 year rental in advance to resolve my concerns about his income. Can I accept the prepaid 1 year rent? is that legal? I am at bellevue, Washington state. Thanks in advance for you suggestions and insights.
Thanks
Yes you can accept rent in advance. The fact that he wants to pay you all of this in advance due to his poor credit is the bigger issue here. How bad is his credit? Are you sure you want him as a tenant?
Thanks James for you answer! His credit score is 618 and his wife is 803. He filed bankruptcy (chapter 7) at 2010 and has no criminal history and eviction. They will live with 2 children
Developer · Point Pleasant Beach, NJ · Member since 2015 · 303 posts · 216 votes
7y
@Wilson Tao, you want to check with the laws in your state. In New Jersey we can't demand the tenant pays more than 1.5 months in advance. However, if they choose to pay more up front, that is up to them. But just check on the laws.
I am a new landlord and am listing my first house for rental. There is an applicant who is self employed and wanted to pay me 1 year rental in advance to resolve my concerns about his income. Can I accept the prepaid 1 year rent? is that legal? I am at bellevue, Washington state. Thanks in advance for you suggestions and insights.
Thanks
Yes you can accept rent in advance. The fact that he wants to pay you all of this in advance due to his poor credit is the bigger issue here. How bad is his credit? Are you sure you want him as a tenant?
Thanks James for you answer! His credit score is 618 and his wife is 803. He filed bankruptcy (chapter 7) at 2010 and has no criminal history and eviction. They will live with 2 children
If that all checks out when you run his background he sounds like a good tenant to me. I would not be worried if I were you.
Peachtree City, GA · Member since 2016 · 41 posts · 17 votes
7y
If you do it you need to keep it in a separate account just like your deposit money and transfer it each month. In your books you need to track it as a liability until you record it as income.
Residential Real Estate Broker · College Station, TX · Member since 2013 · 1k+ posts · 969 votes
7y
@Wilson Tao. I'm taking it - and I'm CASHING the check tomorrow.
I would add in lease tenants have Inspected the property and Accept the Property "AS IS". Money is Non-Refundable if lease is terminated early except for "Acts Of God Or Nature" that might render the property uninhabitable.
Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
7y
There's another issue here: how is he paying you - check, cash? For a cash payment of $10,000 or greater: "any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file Form 8300. A "transaction" occurs when:
Goods, services, or property are sold;
Property is rented;
Cash is exchanged for other cash;
A contribution is made to a trust or escrow account;
A loan is made or repaid; or
Cash is converted to a negotiable instrument, such as a check or a bond.
(End of IRS Publication quoted)
If you, as the landlord, were to take the cash to the bank to deposit it or convert it to a check - the bank would file the form 8300 on you.
I wouldn't be opposed to rent being pre-paid for the year with an executed contract in place but I would expect payment to be wired or electronically received.
Rental Property Investor · Milwaukee, WI · Member since 2019 · 88 posts · 49 votes
7y
We had a prospective tenant offer to pay 3 months in advance in exchange for immediate move in. A huge red flag. An immediate: ‘No, thank you, please submit an application. Landlord will be performing a background and credit check.’
What is their job? Do you know what it is exactly that they do? The source of cash matters.
Also - look at it from the other side - what if you want them gone before the year is up? There would not be much you can do...
"Money is Non-Refundable if lease is terminated early except for "Acts Of God Or Nature" that might render the property uninhabitable."
That would be an illegal lease clause and will not hold up in court. You must keep the money in a separate account and withdraw the rental amount monthly. It is not your money it is his and legally he can demand the return of any unused portion at any time.
This applicant would not have passed my minimum screening requirements and would have been rejected. I personally do not accept applicants based on a bribe. This is a extremely poor business practice and not worthy of a legitimate landlord in my opinion (of course we all know how much opinions are worth).
Steinhatchee, FL · Member since 2017 · 77 posts · 69 votes
7y
Im no landlord, but theres no way I would do that. If they can give you 1 years worth of rent, then they can put it in the bank and pay you each month. Ive read so many cases of renters who have ended up being horror stories; especially those that pay 1 year up front. Then you can't evict them, and are stuck with them. Why should landlords have to babysit people because they cant handle their own money? Especially if the wife has a 803 credit score. Doesnt pass the sniff test to me. Why cant the lease be put in the wifes name?
Investor · USA · Member since 2019 · 117 posts · 57 votes
7y
A years rent in advance. Sounds like a reasonable person to me. Just make sure he or his kids don't damage your property by inspecting it once in a while if you can.