Accepting rent by Bitcoin
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Investor · Wichita Falls, TX · Member since 2010 · 3k+ posts · 603 votes
13y
Originally posted by Bryan H.:
I wouldn't take fake money in exchange for my real property. There isn't a need to barter for your property. There are plenty of people with cash that can afford rent.
Bitcoin is just as real as any fiat currency, especially the US dollar! The great thing is it's not in direct control by a central bank/federal reserve.
With that said, it's still just too much hassle anyway!
30 Replies
- Rental Property Investor · Brookline, MA · Member since 2013 · 1k+ posts · 777 votes13y
Bitcoin, Paypal and the like all take a fee out at some point in the process. Bitcoin "only" charges 1% on merchant transactions. They do not always list the rest of the fees associated with currency exchange.
If you want to accept payments online, stick with dwolla.com. It's 25 cents per transaction, is standard US currency and they have most of what you need as a small time landlord.
- SFR Investor · Valencia, CA · Member since 2012 · 22 posts · 0 votes13y
There are regulatory issues, volatility issues, and technical issues that all spell potential disaster for the currency. But then I think the appeal for those who do accept it is that volatility. If it made sense and it was easier for my tenant, i.e., he or she was a miner, I would probably take it if it meant I could see it in my account early on the 1st. I would would also be quick about getting to the exchange.
- 13yPeter T.Chicago, IL · Member since 2013 · 8 posts · 2 votesOP
Originally posted by Bryan H.:
I wouldn't take fake money in exchange for my real property. There isn't a need to barter for your property. There are plenty of people with cash that can afford rent.I think the only way Bitcoin would be realistically accepted for rent would be if the tenant pays by Bitcoin, and it's immediately converted into USD by the service and paid out to the landlord. That way both the tenants and landlords are happy.
- Investor · Wichita Falls, TX · Member since 2010 · 3k+ posts · 603 votes13y
Originally posted by Bryan H.:
I wouldn't take fake money in exchange for my real property. There isn't a need to barter for your property. There are plenty of people with cash that can afford rent.Bitcoin is just as real as any fiat currency, especially the US dollar! The great thing is it's not in direct control by a central bank/federal reserve.
With that said, it's still just too much hassle anyway!
- 12yJ. MartinPro MemberRental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
You're right, if you convert it immediately, you're pretty safe. Michaela Graham knows of a service where you can price in USD, and they'll charge the customer whatever bitcoins it is at that time, and deliver you USD. At that point, there's not much stopping you, as long as you can get them to pay the 1% fee, or eat it..
I bought a few as a highly speculative investment/gamble with some extra cash I had, and has been a wild ride.
@Mehran K. , exactly! Funny, saw a quote by Greenspan that said it had no intrinsic value and a monetary system not "backed by a govt" could never be successful. Backed by what? You can't trade in your dollars for hard assets from the govt for the last many decades.. I guess the "backing" is the unlimited ability to print it?? lol I think the Fed balance sheet is approaching $4 trillion.. only 21MM bitcoins will be in existence for the rest of time.. (although there is litecoin, novacoin, that could gain traction - or crash to nothing! who knows?!). Anyway, as long as you can afford to lose every penny you have in it, go have some fun.. Can buy fractions of coins easily on coinbase.com from US bank account.. fyi
This caught my attention after our most recent BTC discussion, 3 months later..
http://www.biggerpockets.com/forums/311/topics/108051-can-bitcoin-be-utilized-in-real-estate
- Investor · Appleton, WI · Member since 2012 · 1k+ posts · 464 votes12y
j martin, The US Dollar is backed by the productive capacity of the US economy. The US treasury market is the most liquid investment the world hasever known. The US produces roughly 20% of the entire world's output. To top all that off US Dollars are required to pay federal taxes (and primary for most state and local taxes) on income.
If I had a tenant that wanted to pay in bitcoin, the only reason I would do so is if I desired to invest in bitcoins by that amount or greater regardless as that would cut out a step.
- 12yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
There sure is quite a lot of hassle to buy these things.
Hopefully a smoother cash buying process will be figured out soon.
Thanks
- 12yJ. MartinPro MemberRental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
@Kyle Hipp , all the points you make are true. The dollar will be the predominant currency in the world for a long long time. (although perhaps less dominant than it has been in the past). And treasuries will still be the most liquid market for any foreseeable future. I do not doubt any of that. But the productive capacity of the economy does not "back" the US dollar. We just use it as a medium of exchange. And the FOMC concertedly reduces the value of the dollar through inflation and increased money supply (they explicitly state that positive inflation is their goal and they target it. real returns on interest bank deposits are negative). No one can increase the supply of bitcoins beyond 21 million. I didn't mean to imply that bitcoin would every replace or challenge the USD, just that it has some characteristics of a store of value that could make it an increasingly used store of value & medium of exchange (and many holding for speculative investment, like myself..)
Again, having said all that bitcoin is wildly volatile and you should only keep some if you're looking for a gamble and you can afford to lose it all. But if a company will quote someone in their foreign currency, and deliver me USD in the same amount that I am asking for my rent/product/whatever, what would I care how much yen/bitcoin/whatever they are coming out of pocket? As long as I receive my $1095 USD on the first of every month.. There wouldn't be a benefit for the marketing in my area, but about 60 miles south in silicon valley where the young rich tech geeks like it, you might be able to get some sizzle on the marketing and better rents with the attention..
- Investor · Appleton, WI · Member since 2012 · 1k+ posts · 464 votes12y
@ J Martin. I think we are on the same page with the bitcoin and its unique position. There is a limited number and thus as long as it remains popular and in demand value should hold across all currencies or increase. Same can be said for rare art or rare classic cars. However same concept applies to a loss in value such as with rare sports cards or beanie babies, lose popularity and demand and lose value no matter how rare.
I still stand by my statement that the US Dollar is backed by the productive capacity of the US economy. Many folks will state how the US Dollar has lost 97% of its value since 1913 however that is only one side of the equation. I believe once standard of living has been factored in we are still doing pretty good. I would much rather have $1 million today than the inflation adjusted equivilent in 1913.
Many folks also seem to believe that high inflation or even hyperinflation is somehow inevitable because of FED "printing" of US Dollars. I believe it is not "printing" but much better described as an asset swap. In cases of hyperinflation, people seem to believe that it is caused by "printing" money but I see it as a symptom not a cause. Hyperinflation in history has involved these factors. 1. Regime change or overthrown government. (Not a risk in the US in my perception). 2. Owing debt is something other than the currency in which they are the monopoly supplier of. (US "debt" is all denominated in US Dollars and it is functionally impossible to default, however government couldchoose to but it is always a choice, not forced). Weimar(Germany) owed war reparations in gold and other countries had loans from the IMF in foreign currencies as well. 3. Loss of productive capacity. (Like earlier stated US has a massive productive capcity although its trajectory may have lowered in recent years it is still pretty darn impressive) Germany had its productive capcity destroyed with WW1 and Zimbabwe also suffered a massive drop in productive capcity that precipitated their hyperinflationary event.
I wouldn't say that thd bitcoin is a good or bad investment, I feel with a good understanding many things can be a wise investment. I don't see a big reason that the bitcoin will have longevity once the nostalgia wears off. I know you were not impling it could replace the US Dollar. The US Dollar has inherent demand in that it is required to pay taxes in the US which is a pretty good motivator especially since lots of folks want to do business in or with the US economy.
- Denver, CO · Member since 2013 · 409 posts · 105 votes12y
Originally posted by Peter T.:
I saw this link on the internet today - what are people's thoughts on this?
Regarding Bit Coins: I have already commented on them in the existing thread.
Regarding Rentalutions: Just some two bit (pun intended) software company trying to capitalize off the buzz surrounding bit coins.
- 12yJ. MartinPro MemberRental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
@Mehran K. , and others
I have listed my fourplex for sale, in BitCoin only.. Hopefully the hype Mr. Rooster is referring to is enough to get some interest since I'm not a highly motivated seller! Buzz or not, I'll take it if it's an above-market gain. "Mr Wonderful" on the Shark Tank said he loves the wedding and funeral business, because people make irrational, illogical decisions, to the detriment of their pocketbook.. Hopefully the same is true with BTC! lol
- Investor · Wichita Falls, TX · Member since 2010 · 3k+ posts · 603 votes12y
@J. Martin What does the trusty accountant say about it? :)
- 12yJ. MartinPro MemberRental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
@Mehran K. , there is already IRS income tax law regarding barter for real estate. And all US federal agencies have said it is a legitimate means of exchange for those who choose to use it at the Senate hearing. It has a readily determinable value (and it fact I will be receiving $650,000.00 USD in my account per the terms of the deal), so I will have an easily identifiable US dollar value for the sale of the asset, with a time stamp on it. And I will have evidence of where the funds came from with the excahnge transaction and the wire transfer. So I will just file my taxes for value received for my property: $650K.
To be honest, the one thing I'm not sure about is what responsibility, if any, I have for verifying that the funds from the buyer have not been obtained by illicit means. I usually have loans, so the Bank usually checks 2 months of deposit statements (not sure how much that really does..). But not sure if seller has any responsibility to check funds of buyers? Maybe some cash buyers/sellers can chime in..? Bitcoin in this case is like buying it with stacks of paper cash, more or less.. Anyway, if someone wants to pay quite a bit over market to get in the news, why should I be the one to stop them? lol
- Investor · Wichita Falls, TX · Member since 2010 · 3k+ posts · 603 votes12y
@J. Martin Let's see if someone bites :)
- 12yJ. MartinPro MemberRental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
Not holding my breath, but in the off chance someone comes out of the strange bitcoin woodwork, it would be a very healthy gain.. If not, 10min of my life... gone!!! I'm really interested in the crypto-currency idea, so the ideas and conversations that swirl around are well worth the few minutes spent marketing the property.
[NO ADVERTISING IN THIS FORUM]
- Denver, CO · Member since 2013 · 409 posts · 105 votes12y
Originally posted by J Martin:
To be honest, the one thing I'm not sure about is what responsibility, if any, I have for verifying that the funds from the buyer have not been obtained by illicit means. I usually have loans, so the Bank usually checks 2 months of deposit statements (not sure how much that really does..). But not sure if seller has any responsibility to check funds of buyers? Maybe some cash buyers/sellers can chime in..? Bitcoin in this case is like buying it with stacks of paper cash, more or less.. Anyway, if someone wants to pay quite a bit over market to get in the news, why should I be the one to stop them? lol
I have bought properties all cash, and I have sold properties to many all cash buyers, verifying that the funds from the buyer have not been obtained by illicit means is something I have never heard of. Maybe there is some State requirement, but I doubt it.
I doubt the Title Insurance or Escrow companies will bless your desire to accept Bitcoins. So you will have to find a buyer that is ok having no Title Insurance.
- 12yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Originally posted by J Martin:
@Mehran K. , and others
I have listed my fourplex for sale, in BitCoin only.. Hopefully the hype Mr. Rooster is referring to is enough to get some interest since I'm not a highly motivated seller! Buzz or not, I'll take it if it's an above-market gain. "Mr Wonderful" on the Shark Tank said he loves the wedding and funeral business, because people make irrational, illogical decisions, to the detriment of their pocketbook.. Hopefully the same is true with BTC! lol
haha
Thats funny
Ill list one of my houses in Litecoin. I am liking them better haha
Thanks
- 12yJ. MartinPro MemberRental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
@Engelo Rumora , you might be the first to do it in LiteCoin! Good luck!
@John Rooster , @Jon (Moderator) said the same that he wasn't aware of any responsibility of the seller to verify the funds either. Good point about getting title insurance though. Although aren't they mainly checking to see if the liens have been clear and the consideration has changed hands? Will they have an issue if the original buyer funds were held in a commodity (BTC, 100 oz of gold, herd of cows, whatever?) As long as there is a record of the sale and conversion to USD? I really don't know about the details of what they are doing. Thanks for tip though. Hadn't thought of that.
btw, my link was removed, probably because of the way I presented it. But BP members are using bitcoins. Search bitcoin on BP if this link gets removed again. It is not intended as a solicitation, just to inform people about the discussion on this forum regarding bitcoins (if you remove the link, please leave the rest of the text): http://www.biggerpockets.com/forums/517/topics/108747-first-bp-member-property-for-sale-in-bitcoins-only
- Investor · Redlands, CA · Member since 2013 · 177 posts · 76 votes12yI would be careful about viewing bitcoin as a currency. The volatility makes it more like a commodity. Imagine accepting metals as rent or barrels of oil, and at least those things actually have some intrinsic value. Sure you might get lucky with a short term increase in bitcoin value, but you'd be speculating. If that's a risk you can afford to take you may get lucky, but I personally would much prefer the good old US dollar.
- Investor · Appleton, WI · Member since 2012 · 1k+ posts · 464 votes12y
John rooster, I don't see why the title company would have an issue. They would get paid in US Dollars but as long as the liens are satisfied and seller agrees with proper paperwork, then there should be no issue.
- Chicago, IL · Member since 2013 · 12 posts · 2 votes12y
Originally posted by @Peter T.:
Originally posted by Bryan H.:
I wouldn't take fake money in exchange for my real property. There isn't a need to barter for your property. There are plenty of people with cash that can afford rent.I think the only way Bitcoin would be realistically accepted for rent would be if the tenant pays by Bitcoin, and it's immediately converted into USD by the service and paid out to the landlord. That way both the tenants and landlords are happy.
Hi Peter, I'm sorry for being late here. I'm one of the founders of Rentalutions. What you're describing is exactly what we do. As soon as tenants pay with bitcoin, it is immediately converted into USD. We've processed over $100k in rent this way with no complaints. Both parties are happy.
- Chicago, IL · Member since 2013 · 12 posts · 2 votes12y
Originally posted by @Bryan H.:
It's starting to get some traction. http://www.inman.com/2013/12/16/bitcoin-now-accepted-by-renthop/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+inmannews+%28Inman+News+-+Headlines%29Originally posted by @Bryan H.:
Bitcoin is certainly gaining in popularity, especially among young tech folks. Property owners should be indifferent to the currency that tenants pay in as long as they ultimately receive USD.
- Cincinnati, OH · Member since 2013 · 292 posts · 81 votes12y
Originally posted by @Ryan Coon:
Bitcoin is certainly gaining in popularity, especially among young tech folks. Property owners should be indifferent to the currency that tenants pay in as long as they ultimately receive USD.Given the volatility of bitcoin, this would be the only way that I'd accept it. I have enough worries without having to wonder whether or not the payment has dropped (or risen) by 20% before I'd converted it.
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