Author Topic: how do you feel about accepting rent in cash?  (Read 8456 times)

sol

  • Walrus Stache
  • *******
  • Posts: 8493
  • Age: 42
  • Location: Pacific Northwest
how do you feel about accepting rent in cash?
« on: November 07, 2015, 04:29:28 PM »
Landlords,

How do you feel about being paid in cash?  Other than the inconvenience of potentially having to meet your tenant once a month to hand off an envelope full of large bills, are there any other drawbacks to cash rentals?


Villanelle

  • Magnum Stache
  • ******
  • Posts: 3132
Re: how do you feel about accepting rent in cash?
« Reply #1 on: November 07, 2015, 05:53:46 PM »
Concerns with counterfeit bills?  A good friend of mine is married to a defense attorney and his clients pay in cash surprisingly often.  She got caught twice trying to use the bills, which turned out to be counterfeit. Obviously embarrassing, and of course they were out that money.  I believe he bought one of those counterfeit pens.  After she told me that, I'd be a bit more worried about accepting large amounts of cash. 

Neustache

  • Handlebar Stache
  • *****
  • Posts: 1192
Re: how do you feel about accepting rent in cash?
« Reply #2 on: November 07, 2015, 05:56:41 PM »
I don't love it, but I accept it.  I had a renter (well, my only renter) who had bounced a couple of checks and he started paying in cash to avoid that with us.  I just don't like having to take the cash to deposit it - makes me feel weird with that much on me.

Letj

  • Bristles
  • ***
  • Posts: 384
Re: how do you feel about accepting rent in cash?
« Reply #3 on: November 07, 2015, 06:11:09 PM »
For me it depends on who the tenant is. For most of my low income properties if I have to pick up rent I make them get a money order. However, I don't generally pick up rent. I have the tenants deposit cash into my bank account.

Dicey

  • Senior Mustachian
  • ********
  • Posts: 11250
  • Age: 61
  • Location: NorCal
Re: how do you feel about accepting rent in cash?
« Reply #4 on: November 07, 2015, 07:24:24 PM »
I used to have a roommate who paid in cash, which I liked because I may or may not have been reporting the income. For a designated rental property, I think the paper trail of a check might be helpful in case of audit. Perhaps a receipt along with the cash? I know, there's not much chance of audit, but having been audited once*, it's worth giving thought to.

*Shockingly, the audit was a remarkably non-traumatic experience. I had excellent documentation, but I had mis-reported some interest, which triggered the audit. The auditor could clearly see how I'd made the error, plus I'd dredged up some receipts that I'd been missing when I filed my taxes, so I walked away in the black. In fact, the audit was exponentially easier than getting a mortgage on an investment property we just bought. By a very large multiplier.

One more thought: when we got said mortgage, they combed through all of our deposits, many of which I then had to provide back-up documentation for (even though it was my own freaking bank). If you ever intend to apply for another mortgage, be careful of how you handle those deposits.

Blatant

  • Stubble
  • **
  • Posts: 175
Re: how do you feel about accepting rent in cash?
« Reply #5 on: November 07, 2015, 07:33:04 PM »
Great way for tenants to launder the proceeds of illegal enterprises/drug sales.

sol

  • Walrus Stache
  • *******
  • Posts: 8493
  • Age: 42
  • Location: Pacific Northwest
Re: how do you feel about accepting rent in cash?
« Reply #6 on: November 07, 2015, 08:05:48 PM »
Great way for tenants to launder the proceeds of illegal enterprises/drug sales.

Assuming you believe the cash is from a legal business, are there any other concerns?  I understand the desire to avoid renting to criminals, but that's not an issue here.

okobrien

  • Stubble
  • **
  • Posts: 107
    • Up From Wage Slavery
Re: how do you feel about accepting rent in cash?
« Reply #7 on: November 07, 2015, 08:49:47 PM »
I have tenants who have paid cash almost every month for the past year and a half.  I live half a mile from the rental and another half mile from my bank so I don't mind waking the dog to pick up and drop off the fat wad of cash.  They say they have had checks bounce in the past and don't want to risk it again and I don't mind.  It did feel funny at first walking through the drive through and shoving $1300 into the ATM.

Kriegsspiel

  • Pencil Stache
  • ****
  • Posts: 977
Re: how do you feel about accepting rent in cash?
« Reply #8 on: November 07, 2015, 08:59:59 PM »
Sol, another factor to take into account is the amount of chill generated by pot dealers. I am unfamiliar with other kinds of drug dealers, but merchants of grass generate passivity to anyone connected via the central duct-work. So with only 1 unit's worth of illegality, you gain multiple units worth of cartoon-viewing/snacking.

Something to consider.

EDIT: You may have to weigh the chance of Cheetos stains on the carpet against the average occupancy. I know many landlords don't incorporate this into their calculations.
« Last Edit: November 07, 2015, 09:02:44 PM by Kriegsspiel »

Cpa Cat

  • Handlebar Stache
  • *****
  • Posts: 1644
Re: how do you feel about accepting rent in cash?
« Reply #9 on: November 07, 2015, 09:16:50 PM »
I had a landlord who ONLY accepted cash from all of his tenants. I thought it was kind of weird. But he ran a lot of low-end rentals and said people bounced checks too often. And he was clear - if the cash didn't hit his palm on the day the rent was due, his next stop was the courthouse to start eviction proceedings.

sol

  • Walrus Stache
  • *******
  • Posts: 8493
  • Age: 42
  • Location: Pacific Northwest
Re: how do you feel about accepting rent in cash?
« Reply #10 on: November 07, 2015, 09:22:18 PM »
So with only 1 unit's worth of illegality, you gain multiple units worth of cartoon-viewing/snacking.

It's a single family home, no smoking allowed, one proposed resident.  It's a valid point you're making, in a different context.

lostamonkey

  • Bristles
  • ***
  • Posts: 454
  • Location: Canada
Re: how do you feel about accepting rent in cash?
« Reply #11 on: November 07, 2015, 09:42:10 PM »
I had a landlord who ONLY accepted cash from all of his tenants. I thought it was kind of weird. But he ran a lot of low-end rentals and said people bounced checks too often. And he was clear - if the cash didn't hit his palm on the day the rent was due, his next stop was the courthouse to start eviction proceedings.

If I had a landlord who only accepted cash my first thought would be tax evasion.

If I was a landlord and had a tenant who only paid cash my first thought would be drug dealer.

Kriegsspiel

  • Pencil Stache
  • ****
  • Posts: 977
Re: how do you feel about accepting rent in cash?
« Reply #12 on: November 07, 2015, 09:46:38 PM »
I had a landlord who ONLY accepted cash from all of his tenants. I thought it was kind of weird. But he ran a lot of low-end rentals and said people bounced checks too often. And he was clear - if the cash didn't hit his palm on the day the rent was due, his next stop was the courthouse to start eviction proceedings.

If I had a landlord who only accepted cash my first thought would be tax evasion.

If I was a landlord and had a tenant who only paid cash my first thought would be drug dealer.

I see where you are going with this, and yes, I can offer my services to take care of your problem. I utilize un-traceable "gangland" hardware, similar tactics, and a 100% success rate. Please mention the discount code "MMM" in your PM.

Bearded Man

  • Handlebar Stache
  • *****
  • Posts: 1142
Re: how do you feel about accepting rent in cash?
« Reply #13 on: November 07, 2015, 11:29:37 PM »
I have them deposit into a business account I setup just forthis purpose. Pretty hard to deny being late on rent or claim you didn't cash it in time. Their deposit is irrefutable evidence of late or non payment (in the case of no deposit).

Telecaster

  • Handlebar Stache
  • *****
  • Posts: 1969
  • Location: Seattle, WA
Re: how do you feel about accepting rent in cash?
« Reply #14 on: November 08, 2015, 12:00:12 AM »
I have them deposit into a business account I setup just forthis purpose. Pretty hard to deny being late on rent or claim you didn't cash it in time. Their deposit is irrefutable evidence of late or non payment (in the case of no deposit).

^ I do the same thing.  It is important to have a record of the deposit, in case a question arises later. 

Blatant

  • Stubble
  • **
  • Posts: 175
Re: how do you feel about accepting rent in cash?
« Reply #15 on: November 08, 2015, 08:10:07 AM »
Sol: I was being a little facetious. More seriously, I would want to hear an explanation of why specifically the person wants to pay in cash. I mean, it's not really a huge deal, but I'd be curious about why.

Could be entirely legit. Could be someone who gets paid off the books. Could be a drug dealer or someone involved in an illegal enterprise that gets paid in cash. Not your problem, but could lead other problems back to your proverbial door.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28132
  • Age: -999
  • Location: Seattle, WA
Re: how do you feel about accepting rent in cash?
« Reply #16 on: November 08, 2015, 09:28:00 AM »
What, exactly, is your concern?
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

sol

  • Walrus Stache
  • *******
  • Posts: 8493
  • Age: 42
  • Location: Pacific Northwest
Re: how do you feel about accepting rent in cash?
« Reply #17 on: November 08, 2015, 10:12:45 AM »
What, exactly, is your concern?

Was that directed at me?  My concern is that I haven't yet considered some important aspect of accepting large cash payments, and this could get ugly for reasons I won't see coming.  The issues raised here thus far:

1.  Cash might indicate an illegal income source, which presumably makes her a bad or risky tenant.
2.  Cash payments may complicate record keeping, since they don't automatically generate their own receipts.
3.  Cash presents a safety hazard, as it can potentially be stolen from you.
4.  Cash might be counterfeited, and you would lose out on that income.

Any others I should know about?

undercover

  • Pencil Stache
  • ****
  • Posts: 945
Re: how do you feel about accepting rent in cash?
« Reply #18 on: November 08, 2015, 10:28:04 AM »
The only reason I wouldn't accept cash personally is it's clunky and unnecessary, on top of being a waste of time collecting it.

It's just as easy for someone to take that cash directly to the bank as it is for them to give it to you.

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6551
  • Location: BC
Re: how do you feel about accepting rent in cash?
« Reply #19 on: November 08, 2015, 10:39:25 AM »
Like Neustache, I had to convert a renter to cash, and much preferred it to the cheque bouncing dance that was going on. 

It was not a great rent situation, but as long as they paid, we decided put put up with it until the year lease was up.

Even better would have been to have them deposit it to our bank account... and I would have been willing to set up an account at their very own branch to make it convenient for them, too.  Just note that the bank will reverse funds if it shows up as XX deposit and envelope is empty or counterfeit (ATM deposit).  You can't rely on the funds for the first 5 days until it all clears.

Cash worked a lot better in this case.  (half a duplex in SFR area, rented to family).
I think what happened is that they had a garnishment on the chequing account, and did not want to keep much money in there.  Yep, red flag.    I know other valid businesses, like carpentry repair, that accept cash for a discount, so they can choose what to report for taxation... so they have a lot of mostly valid cash on hand.  It is distressingly common here that 20% of one's business may be in cash for this reason.



Problems --
1)  Counterfeit is a minor concern.  More likely that they unknowingly accepted counterfeit and are passing it on, if they do a lot of business in cash.
2)  Counting. You need to count on the spot, then  I recommend handing over a receipt slip when you pick it up, using the generic receipt book that has carbon copies.
3)  You need to coordinate meeting up with the tenant.  Could get the run around for a couple of days and waste your time.
4)  Our tenant had a grown son steal their rent cash from their wallet one month.

PROS
On the plus side, you get a lot of face time with tenant, and get to see the outside of the property frequently, they know you come around, and sometimes you get invited into the front hall.  Nice to check on things.

These tenants were actually very handy, they wanted to repair the small deck, and we purchased materials, and they did a fantastic job.   Practically rebuilt the whole thing.  Solidly, too.

sol

  • Walrus Stache
  • *******
  • Posts: 8493
  • Age: 42
  • Location: Pacific Northwest
Re: how do you feel about accepting rent in cash?
« Reply #20 on: November 08, 2015, 10:55:49 AM »
The only reason I wouldn't accept cash personally is it's clunky and unnecessary, on top of being a waste of time collecting it.

It's just as easy for someone to take that cash directly to the bank as it is for them to give it to you.

In this case, the cash is from a legal cannabis business and the business has legal constraints on using the banking system because even though their business is legal in Washington State, the federal government still hasn't updated the banking laws.

I don't think it's going to matter, as we've had two other tenants apply ahead of her.  She seemed very interested in the property, but I'm not going to turn down other qualified renters who applied first just so that I can deal with the complications of cash.

I wasn't thrilled when I found out my current tenants were bailing on me over the holidays, but we've had a ton of interest from people who wanted to move in, even for a December lease date.  Apparently I should be charging higher rent.

Shane

  • Pencil Stache
  • ****
  • Posts: 884
  • Location: Independent
Re: how do you feel about accepting rent in cash?
« Reply #21 on: November 08, 2015, 11:20:04 AM »
We have a tenant who pays his rent in $20 bills every month. I know for a fact he's not a drug dealer or involved in any other illegal activities.

At one point I asked him, why? Wouldn't it be easier to just write a check? He told me that he didn't have a checking account, because he had closed it because the bank kept charging him fees when his balance dropped below $500.

This tenant is super reliable, though. He has paid his rent every month for over 8 years!

To me it makes no difference how our tenants pay (cash, check, money order, PayPal). I'll accept payment in whatever ways are convenient for my tenants (customers). I just want them to pay.


Blatant

  • Stubble
  • **
  • Posts: 175
Re: how do you feel about accepting rent in cash?
« Reply #22 on: November 08, 2015, 12:29:57 PM »
Hilarious. I knew it.

This has nothing to do specifically with weed, but think of the headaches when that tenants get home-invaded and murdered in your property so a rival organization can steal the 20 pounds of hydro being stored inside. Think it doesn't happen?

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28132
  • Age: -999
  • Location: Seattle, WA
Re: how do you feel about accepting rent in cash?
« Reply #23 on: November 08, 2015, 12:51:59 PM »
Hilarious. I knew it.

This has nothing to do specifically with weed, but think of the headaches when that tenants get home-invaded and murdered in your property so a rival organization can steal the 20 pounds of hydro being stored inside. Think it doesn't happen?

"Rival organization"?

Sol is in WA, where it is legal:
the cash is from a legal cannabis business and the business has legal constraints on using the banking system because even though their business is legal in Washington State, the federal government still hasn't updated the banking laws.

I'd have a problem in that scenario, because now you're accepting money from proceeds of something that is illegal federally.  Anyone could reasonably spin that as you being involved in money laundering.  Probably won't ever be an issue, but I wouldn't risk it.

I don't have a problem accepting cash from tenants typically.  Heck, many of my tenants pay in cash (I just don't collect it, they give it to the bank teller to deposit into my account).
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

sol

  • Walrus Stache
  • *******
  • Posts: 8493
  • Age: 42
  • Location: Pacific Northwest
Re: how do you feel about accepting rent in cash?
« Reply #24 on: November 08, 2015, 12:55:56 PM »
This has nothing to do specifically with weed, but think of the headaches when that tenants get home-invaded and murdered in your property so a rival organization can steal the 20 pounds of hydro being stored inside. Think it doesn't happen?

There would be no growing, no smoking, no selling, and no cash at the house.  Those things all have a designated place, and my house would have been the personal residence of an accountant.  An accountant who happened to work for a cannabis business.

But like I said it doesn't matter anymore because she didn't apply soon enough. 

msilenus

  • Pencil Stache
  • ****
  • Posts: 517
Re: how do you feel about accepting rent in cash?
« Reply #25 on: November 08, 2015, 01:03:31 PM »
Your biggest risk isn't dealing in cash.  I know a section 8 landlord who did that for decades, and I can't imagine it's uncommon.

Talk to a lawyer about the drug angle.  Federal law hasn't been changed.  It probably helps that you're only renting a house and not a business facility, but you do know about what's going on.  Make sure you aren't taking on any criminal or asset forfeiture risk with the feds.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28132
  • Age: -999
  • Location: Seattle, WA
Re: how do you feel about accepting rent in cash?
« Reply #26 on: November 08, 2015, 01:06:24 PM »
Your biggest risk isn't dealing in cash.  I know a section 8 landlord who did that for decades, and I can't imagine it's uncommon.

Talk to a lawyer about the drug angle.  Federal law hasn't been changed.  It probably helps that you're only renting a house and not a business facility, but you do know about what's going on.  Make sure you aren't taking on any criminal or asset forfeiture risk with the feds.

Yeah, asset forfeiture is *, but scares the * outta me.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Blatant

  • Stubble
  • **
  • Posts: 175
Re: how do you feel about accepting rent in cash?
« Reply #27 on: November 08, 2015, 01:38:44 PM »
Yes, yes, I have good reading comprehension. Don't want to get too far afield here as Sol has apparently solved the issue.

That said, I am intimately familiar with this issue. I have no personal issues with legalized marijuana. However, the production and distribution of high-grade -- even in states where medicinal and recreational use has been legalized or decriminalized -- is to some  degree controlled in large part by Mexican drug trafficking organizations. I think many folks have this idea that legal marijuana is grown and distributed by happy hippies with an organic grow in the back bedroom. For the most part, that's just not the case. This is a big industry with a lot of money at stake.

sol

  • Walrus Stache
  • *******
  • Posts: 8493
  • Age: 42
  • Location: Pacific Northwest
Re: how do you feel about accepting rent in cash?
« Reply #28 on: November 08, 2015, 02:38:00 PM »
I think many folks have this idea that legal marijuana is grown and distributed by happy hippies with an organic grow in the back bedroom. For the most part, that's just not the case. This is a big industry with a lot of money at stake.

I did ask her about these details.  They apparently run an entirely indoors growing operation with CO2 injection, in a neighboring city.  They have a retail store front in another neighboring city.  It's not exactly happy hippies, but neither is it Mexican drug lords.

But you're right, doesn't matter anymore.  I'll delete the thread in a little while.

Cathy

  • Handlebar Stache
  • *****
  • Posts: 1046
Re: how do you feel about accepting rent in cash?
« Reply #29 on: November 08, 2015, 02:59:44 PM »
I'll delete the thread in a little while.

I wonder what brooklynguy thinks about this proposition.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28132
  • Age: -999
  • Location: Seattle, WA
Re: how do you feel about accepting rent in cash?
« Reply #30 on: November 08, 2015, 03:03:13 PM »
I'll delete the thread in a little while.

I wonder what brooklynguy thinks about this proposition.

I had a reply, but when I clicked to reply, it alerted me that you had done so in the meantime.  And yours was much better.  Well played.

We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

brooklynguy

  • Handlebar Stache
  • *****
  • Posts: 2207
  • Age: 39
Re: how do you feel about accepting rent in cash?
« Reply #31 on: November 08, 2015, 04:50:07 PM »
I wonder what brooklynguy thinks about this proposition.

If you want no record of an event, don't disclose it on the internet.  And use cash.

johnny847

  • Magnum Stache
  • ******
  • Posts: 3196
    • My Blog
Re: how do you feel about accepting rent in cash?
« Reply #32 on: November 08, 2015, 04:59:18 PM »
I wonder what brooklynguy thinks about this proposition.

If you want no record of an event, don't disclose it on the internet.  And use cash.

The Internet is the anti-Las Vegas: what happens there remains visible to everyone forever.

sol

  • Walrus Stache
  • *******
  • Posts: 8493
  • Age: 42
  • Location: Pacific Northwest
Re: how do you feel about accepting rent in cash?
« Reply #33 on: November 08, 2015, 05:13:52 PM »
Apparently we no longer have the ability to delete our own threads?

brooklynguy

  • Handlebar Stache
  • *****
  • Posts: 2207
  • Age: 39
Re: how do you feel about accepting rent in cash?
« Reply #34 on: November 08, 2015, 05:38:12 PM »
Apparently we no longer have the ability to delete our own threads?

See here (which explains Cathy's comment).

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28132
  • Age: -999
  • Location: Seattle, WA
Re: how do you feel about accepting rent in cash?
« Reply #35 on: November 08, 2015, 05:41:48 PM »
Haha, Sol was about to do what BG most feared (last sentence here)!
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

brooklynguy

  • Handlebar Stache
  • *****
  • Posts: 2207
  • Age: 39
Re: how do you feel about accepting rent in cash?
« Reply #36 on: November 08, 2015, 06:06:05 PM »
Haha, Sol was about to do what BG most feared

Ha.  You're welcome, posterity.

adamcollin

  • Stubble
  • **
  • Posts: 154
  • Age: 28
  • Location: Texas
Re: how do you feel about accepting rent in cash?
« Reply #37 on: November 09, 2015, 01:17:08 AM »
I don't think there are any drawbacks but online payments are more convenient for both tenants and landlords.

bacchi

  • Magnum Stache
  • ******
  • Posts: 4081
Re: how do you feel about accepting rent in cash?
« Reply #38 on: November 09, 2015, 01:52:10 PM »
The post office sells money orders. I'd never accept cash due to forfeiture laws.

Cranberries

  • Stubble
  • **
  • Posts: 126
Re: how do you feel about accepting rent in cash?
« Reply #39 on: November 09, 2015, 05:04:17 PM »
I had a very responsible, straight laced, college educated housemate once who always paid his share of the rent in cash. Due to this and a couple of other similar details, I strongly suspect he was a dreamer / in the country illegally. Drug money is not the only reason someone might want to do this.



« Last Edit: November 09, 2015, 05:11:05 PM by Botanist »

msilenus

  • Pencil Stache
  • ****
  • Posts: 517
Re: how do you feel about accepting rent in cash?
« Reply #40 on: November 09, 2015, 06:00:12 PM »
I mentioned earlier that I know a section 8 landlord who did most of their business in cash.  I feel like I should clarify that the reason wasn't primarily that the tenants were in the drug trade.  It was the poverty.  They didn't have bank accounts.

Gone Fishing

  • Magnum Stache
  • ******
  • Posts: 2754
  • So Close went fishing on April 1, 2016
    • Journal
Re: how do you feel about accepting rent in cash?
« Reply #41 on: November 19, 2015, 09:02:01 AM »
The post office sells money orders.

Surprised this took so long to show up.  We had a tenant who routinely wrote rubber checks, so I told her I would only accept money orders (she had to buy 2 for the rent amount) or official bank checks. The word cash was never mentioned.