Is It Okay To Accept Cash For Rent?
When it comes to paying rent, the market seems to offer several ways to go about it. However, younger tenants have probably never written a check for their rent. The old payment methods are gradually being outdated as people exploit new convenient ways. Although checks, cash, money orders and bank transfers are all possible ways of paying rent, it is important to find the most convenient for you. As the saying goes, cash is king, but should you accept cash for rent? Most landlords with a spare room next to their main house may probably accept cash. However, property managers, operators of student housing and leasers will probably never accept cash. Here are a few reasons why you should take anything else but cash as a landlord.
• For security purposes – This is one of the most obvious reasons for not taking cash from your tenants. Liquid cash is something people strive hard to get and burglars are always on the look for places where they can get cash. If people know you take cash from tenants, it quickly increases the chances of break-ins and your potential for crime will only increase. Handling large amounts of cash is usually no recommended especially since you will be collecting from tenants during specific periods.
• Inconvenience – In a general sense, cash is usually accepted in person. No house operators want tenants visiting their office to supposedly pay off their rent. It is also not wise to try sending cash over mail. This makes cash quite inconveniencing for landlords unlike bank transfers and money orders that can be processed without physical presence. With all the advancements in finance and payment methods, it only makes sense to take advantage of all the benefits of modern technology and cash simply prevents you from this.
• Increases burden – A brief look at the entire process of taking cash from tenants reveals it is more of a hassle than other payment methods. As a landlord, you will need to visit your tenants, pick the cash, provide receipts and then rush to the bank for immediate deposition. This does not only waste your time but can also become exhausting particularly if you have other errands to attend to. On the other hand, the modern digital ways offer a means to effortlessly accept all rents in time and process all cover receipts.
• Cash is an ineffective rent payment method – Cash does not often leave an effective paper train and correct accounting of liquid cash can be very difficult. Even with all the receipts, cash will require the landlord to develop their own payment registry to record all received rents. Cover receipts restrict landlords to paper records and files which is less effective when compared to the digital paper trail permanently retained once a transaction is made. There are many better ways for landlords to receive rent from tenants.
• It can be tempting to use part of the rent – Liquid cash is very tempting and many house operators have spent portions of rents paying them back later. With that much cash in your hands, it is quite easy to be tempted into using some and cash also clouds one’s judgment. Bank transfers and money orders on the other hand will require trips to your bank and you only withdraw enough for the expense.
• Most tenants do not prefer cash payments – Younger tenants seldom write checks or use cash payments. Today’s tenants are aware of the conveniences, safety and benefits of using digital rent payment methods over traditional ways. Since tenants are already looking for landlords who offer convenient payment methods other than cash, you should match up to remain competitive.
So should you accept cash for rent? The decision to offer your tenants provisions that allow them to pay rent in cash is purely preferential. There is no legal advice against cash. However, the risks are just not worth it particularly if you have a large property that houses several tenants.
As a landlord, your goal is to establish various convenient rent payment systems that will be easy for everyone (the tenants and you). It should leave a traceable paper-trail without exposing you to crime and risks or fraudulent activities. Taking cash for rent is simply a dated method that only piles up your work.