Rental Property Investor · San Jose, CA · Member since 2019 · 16 posts · 3 votes
I’m trying to think of ways to help my tenants in case some of them cannot come up with rent on April 1st. I currently don’t have a way to accept payments through credit cards but I think that might be helpful for tenants? What do you guys think? How can I start accepting credit cards?
Asking a tenant to pay with a credit card seems harsh. They will have to pay 20% + in interest... i cant see how that is beneficial to them - or you if they drown in that debt.
@Di Ye - We use a property management software called Appfolio and they can pay through that. But as @Scott Mac mentioed, you don't get protection from charge backs.
One other way you could do it is by accepting money through Venmo. They can link their CC and send payments. I don't think I've heard of them being able to claw that money back through chargebacks (but please do your own due diligence)
@Michael Ablan Oh I forgot you can pay with credit card through Venmo! Almost all of my tenants pay me via Venmo already. Thanks a lot for the info, Michael!!
Asking a tenant to pay with a credit card seems harsh. They will have to pay 20% + in interest... i cant see how that is beneficial to them - or you if they drown in that debt.
Mary Mitchell makes a good point, but at the same time some people use CC with everything such as myself and and pay it off monthly. On the other hand some dont pay them off and get into trouble, effecting their future rental payment. I think l would accept CC but only if their income is 3 times the monthly payment and they have a good credit report.
I understand the long-term financial impact of reduced rent vs. vacancy/turnover costs and I, along with most property owners, want to do my best to work with my tenants in this unprecedented and difficult time. However, I am really struggling with all the posts on here and other forums about what we should/should not let our tenants do. Our tenants are adults and are fully capable of making their own decisions.
If a landlord is in a position that they could forego rent for a month or creatively restructure it rather than taking payment from a credit card, then that is fine. But if a tenant makes the decision that they want to pay their rent using a credit card, loan from friends or family, or any other means then they should be able to make that decision. Someone said it best on another thread, but we are not their parents. We can confirm with them if that is really how they'd like to proceed, but we should not have any moral obligation to stop them from making that decision.
Who says they have to pay interest? Maybe they are waiting on their “virus check” and the landlord is needing their money and they don’t want to lose their place to live. CC work for some I these situations if reserves don’t allow such.
There will be businesses doing whatever they can do to weather this storm as well.
I’m in the apartment building game and please know my large mortgage payments aren’t stopping either.
AppFolio is the way to do it. They are a great software that you can use not only to get your tenants to pay online, but also to manage your property or property management using a software that so transparent and organized and can very easily help you track/identify expenses and areas of growth.
The OP said she was trying to think of ways to help her tenants.. sure using a CC may help, but there is also a very big chance that it will make things worse..... if a tenant does not have the savings to pay rent, they surely do not have the saving to pay a CC with interest etc...
just a different perspective and I agree tenants should be able to choose - not that landlord forcing them to pay with a CC
If someone paid rent with a credit card and is living in the unit, what would be the basis for a charge back? Those are typically for when you didn't receive a service or product that you paid for. If they paid their rent via a cc and then did a charge back, that would be grounds for an immediate initiation of eviction. ie, fraud/theft. No different than writing a rubber check. We don't receive any credit payments as our rents are paid directly into our bank accounts, but I just don't see one of our tenants doing a charge back if they did pay with a card. It obviously would result in a bad outcome for them and not sure how they would benefit from it/ Maybe a "professional tenant" would try to game the system in this manner but hopefully our screening processes would preclude us from leasing to someone like that. We always have a "little chat" in person with our tenants during lease signing/move in inspection that we are very intolerant of unpaid rent. We have a late fee system that's a pretty strong incentive to not be late and for the most part, it's pretty effective. Of the tenants that do pay late, it's always the same ones and always a sob story to go along with it. We listen to their woes but we make it plain that it doesn't matter to us why the rent didn't get paid, it was either on time or it wasn't. If it wasn't, then the late fee program goes into effect which is clearly spelled out in the contract. During this virus thing, we will waive late fees for those that are actually affected in some way. A week from now, I'll know a lot more about the financial impact of this. Almost all the threads on the BP site are "speculation" as there hasn't been a rent payment cycle since this got ugly. In the next few days, the speculation will become factual as landlords discover the impact.
I use buildium, It has this option. I have even offered to cover the 2.95% fee for April if they want to use the option. RE charge backs. If that happens then they owe the rent still. Does anyone know the time limit to do a charge back?
Set up an account with cozy.co - your tenants can pay by ACH or credit card, including making partial pmts (you can't turn that off), so if you let them pay weekly during the crisis, that will help some. Paypal is better than venmo or cash app, as it allows for commercial transactions. Zelle is bank to bank only, and technically also doesn't allow commercial transactions, but some do use it.
Some payday loan places let them pay with money orders at no charge (their choice how to pay for those, usually free if they use cash).
Let them decide how to pay, rather than setting up an account that is credit card only (like square, for example).
We had a particularly spacey but wealthy tenant who leased our unit and scheduled her monthly rent payments via Cozy months in advance. When her first month's rent was paid and showed up on her statement, she had forgotten what Cozy was so she had the charge reversed!
We eventually sorted it out but that forgetfulness was the basis of the chargeback. I now make it a habit of reminding tenants when their scheduled first month payment will take place.
@Di Ye check out RentRedi. I use the platform and it gives tenants the option to pay via direct withdrawal or credit card and you can choose whether they pay the fees or you pay the fees.
@Mary Mitchell I assumed his tenant was requesting to pay via credit card because people want benefits from their card’s reward program but they don’t realize the charge back process doesn’t make it worth it. We offer a credit card option but there is a 2.5 to 3% charge back based on the amount they pay. Rent in So Cal is high so you can imagine the CC fee. It’s only a good option if someone falls on hard times and can’t pay rent and they see themselves getting into better financial times in near future .
That's not what they mean by charge back. A charge back is when you go back to your card and make a claim of getting ripped off. Then the merchant (you) pay the card co back.
In addition to the credit card option and offering weekly payments...
I'm considering to reduce my tenant's April payment and spread the balance over the remaining months of the lease. i.e. $900 typical rent. Accept $500 for April and increase the following 4 months to $1K per month.
Another option I'm considering is drawing up an addendum to use a small portion of the security deposit to partially cover April rent. To give some context, this is only one long-term renter I am considering this for. I'm still retaining a decent amount of the security deposit for it's intended purpose. i.e. $900 security deposit, asking the renter to cover $500 and agree to take $400 from the deposit as the April payment.
Thoughts on the pros and cons for these two additional options? Thanks in advance.