is receiving monthly rent in cash bad?

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Mark Holencik
Investor 路 Coplay, PA 路 Member since 2015 路 404 posts 路 315 votes
8y

I have never turned down cash that was owed me. The paper trail is only something the tenant needs. If I landlord claims he did not get the rent. Makes no difference to bookkeeping if it is cash or check.

9Reply
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  • Eric Gross
    Real Estate Agent 路 Cincinnati, OH 路 Member since 2017 路 44 posts 路 10 votes
    8y
    Being paid in cash makes it difficult to provide a trace of the payment. Whereas a check or other form of payment is written evidence of the payment and amount
    1Reply
  • John Thedford
    Real Estate Broker 路 Naples, FL 路 Member since 2013 路 9k+ posts 路 6k+ votes
    8y

    Carrying cash also opens you up to robbery. Besides that the tenants can either send the payment electronically or mail you a cashier's check every month instead of you having to pick it up.

    4Reply
  • Cara Lonsdale
    Realtor and Investor 路 Scottsdale, AZ 路 Member since 2017 路 1k+ posts 路 1k+ votes
    8y

    Collecting cash only works if it is in person, and you can offer a receipt on the spot so that the Tenant can't claim that he gave you more than he did.

    0Reply
  • Mario Mormile
    Investor/ Real Estate Agent 路 Burton, OH 路 Member since 2015 路 167 posts 路 53 votes
    8y

    @Elizabeth Garcia, it adds an extra (unnecessary) step to the process. We use E-Rent Payment and it has worked out great. The monthly rent is automatically withdrawn from the tenant's checking account and I receive that rent check within 2 days in my checking account. Number of minutes I spend each month collecting rent? Zero! I am always looking for ways to systematize and scale our business. Anything that can be done automatically every month is something I put in my arsenal. 

    Merry Christmas!

    5Reply
  • Hernell D.
    Rental Property Investor 路 Los Angeles, CA 路 Member since 2016 路 67 posts 路 35 votes
    8y

    First off collecting money in any form is not stupid, but there are better ways to do it. The biggest drawback of collecting in cash is the lack of a paper trail, it makes it easier for things to get messy. 

    4Reply
  • Mike Dymski
    Investor 路 Greenville, SC 路 Member since 2016 路 5k+ posts 路 13k+ votes
    8y

    What is this strange thing that you call cash...

    5Reply
  • Elizabeth Garcia
    OP
    Westbury, NY 路 Member since 2017 路 30 posts 路 13 votes
    8y

    Thank you @Eric Gross and @Cara Lonsdale for pointing out he paper trail aspect.

    0Reply
  • Elizabeth Garcia
    OP
    Westbury, NY 路 Member since 2017 路 30 posts 路 13 votes
    8y

    Thanks @Mario Mormile for letting me know about E-rent payment, I was only aware of PayPal and Venmo for electronic rent deposits.  

    Merry Christmas 馃巹 

    0Reply
  • Tom GimerBusiness Member
    DMV 路 Member since 2017 路 3k+ posts 路 3k+ votes
    8y

    @Elizabeth Garcia @Mario Mormile

    https://www.biggerpockets.com/forums/52/topics/499...

    Worth a read.

    Gimer Law516 Reviews
    WebsiteView Page
    0Reply
  • Steve Brown
    Nottingham, MD 路 Member since 2011 路 16 posts 路 13 votes
    8y

    Seems like yo got your answer. I don't accept cash and I don't pick up rent. My tenants don't all have a way to use the electronic payments. And those that can don't want to pay the fee (because I'm too cheap to pay it). But they all mail me money orders. (Wait a minute mister tenant, don't you think that the cost of the money orders, and the stamp, and the envelope) cost more than the transaction fee the payment company charges? Anyway) Plus there is no paper trail for the tenant. Google Rent Payments and see what you find. And check this out

    https://www.biggerpockets.com/rei/pay-rent-online-...

    Go get some rent!

    0Reply
  • Mark Holencik
    Investor 路 Coplay, PA 路 Member since 2015 路 404 posts 路 315 votes
    8y

    I have never turned down cash that was owed me. The paper trail is only something the tenant needs. If I landlord claims he did not get the rent. Makes no difference to bookkeeping if it is cash or check.

    9Reply
  • Scott Weaner
    Rental Property Investor 路 Yardley, PA 路 Member since 2008 路 1k+ posts 路 561 votes
    8y

    @Mario Mormile, you are still using eRentpayment, even after the calamitous debacle?

    I had liked them very much, but now am happier with Cozy.

    0Reply
  • Jessie Tetreault
    Investor 路 Enfield , CT 路 Member since 2015 路 55 posts 路 29 votes
    8y

    @Elizabeth GarciaIf they only deal with cash. Have the tenant drop the money in a bank account that you set up. They only need the name of the account and last 4 of the account number to deposit. They give a deposit receipt to the tenant and you can see when the money was deposited on any online banking app. This will make the management of collecting rent easier, forget picking it up in person, and its free.  

    2Reply
  • Cara Lonsdale
    Realtor and Investor 路 Scottsdale, AZ 路 Member since 2017 路 1k+ posts 路 1k+ votes
    8y

    When dealing with electronic payments, Zelle is the way to go!  It's free.  It's instant.  And your funds are immediately available.  It doesn't get any better than that.

    4Reply
  • Tom GimerBusiness Member
    DMV 路 Member since 2017 路 3k+ posts 路 3k+ votes
    8y

    There should be a 6 month moratorium on recommending online rent payment companies on BP.

    Gimer Law516 Reviews
    WebsiteView Page
    1Reply
  • Carl Pickens
    Griffin, GA 路 Member since 2017 路 63 posts 路 82 votes
    8y

    better than not at all 

    0Reply
  • Marian Smith
    Real Estate Investor 路 Williamson County, TX 路 Member since 2011 路 1k+ posts 路 961 votes
    8y
    I have 4 rentals nearby and on one I used to collect cash rent and issue a receipt (required by law in texas). I also changed the furnace filter every month so it worked for me. They pay etf now...and the filter was pretty dirty last time I was there for a repair.
    0Reply
  • Frank Chin
    Investor 路 Bayside, NY 路 Member since 2017 路 1k+ posts 路 1k+ votes
    8y

    I had tenants paid me in cash, heard stories of Landlords paid in cash leading to problems and I myself ran into problems with people paying me in cash.

    I had a auto mechanic who told me he gets paid in cash and would like to pay me in cash. I said no, insisting that he buy me money orders for rent. That worked for a while till his wife got pregnant and as a favor convinced me to take cash so it'll save his wife a trip to the bank to buy money orders. Because he was frequently late, he tried to rip me off by saying he paid for certain months which he never paid. It also got confusing when he made partial rent payments. So it's like he buys a money order, mark down on it that it's Sept rent, but I told him he didn't pay August yet. But he says, that was paid in cash. And I said, no it's not, that was for July. I went through this a few times with this tenant. I kept copies of all the money orders he gave me, and have to go those them, cash receipts I gave him to reconcile his rent payments. Now I get paid online with money taken directly from the tenants checking account, and the difference to cash rent payments is like night and day.

    A landlord, an elderly lady our family knew owns a 3 family. Got friendly with a tenant who paid her in cash. A short while he moved in, discussed with her the advantages of cash rent payments and that she don't even have to report it on her taxes. Somewhere along the line, she was dumb enough to confirm to him she didn't report it. Shortly after this, he told her he'll inform the IRS she's been cheating on her taxes. Says he'll do her a favor not squealing if she gives him free rent for a year. The elderly lady, who doesn't speak good English, got frightened, didn't want to get into trouble with the IRS, gave the tenant a year's free rent.

    BTW, I have quite a few prospective tenants who tried to convince me to take cash rent payments, pointing out that I don't have to report it, so the elderly lady landlords problem didn't sound that strange. I tell all of them I report all rent payments cash or not, I have tried cash rent payments, and it's too much trouble for me. So with this, no one threatened to turn me in.

    Oh, I got a police officer who insisted on paying his rent in cash. So I ask him, don't the NYC police department issue paychecks? So he tells me, yes he gets paychecks, but he held a side job that pays in cash. Sounds reasonable, right?? Well, some years later I found out this officer and a bunch of buddies were involved in some racketeering scheme, protection rackets, extortion, all of which involved cash payments, and used my apartment as a hideout to run their activities, i.e. split the loot. No one actually lived there. I only found this out after he was arrested.

    So if a police officer insists on paying rent in cash, watch out. I reported all the cash rent payments on my taxes, but couldn't understand why my water bills were lower while he was there. His arrest finally answered it. So, hah ha, I'm still ahead.

    So is cash rent payments a dumb idea?? I think it is, particularly if you think you can get away with not reporting it, and tenants know that if you take the cash, you're probably up to some NO GOOD, and some of them might actually think of turning you in for a reward. In their mind, if you took the cash, you're just stupid reporting it.

    3Reply
  • Michael Noto
    Real Estate Agent 路 Southington, CT 路 Member since 2008 路 5k+ posts 路 3k+ votes
    8y

    If they have cash they can go get a money order from somewhere.

    0Reply
  • Mike CumbieBusiness Member
    REALTOR庐 路 Brockport, NY 路 Member since 2015 路 3k+ posts 路 4k+ votes
    8y

    @Elizabeth Garcia,

    If they are going to give me cash either they need to come to my house (not going to happen) or I need to meet them somewhere and leave with large chunks of cash. All it takes is someone sitting around and saying "Yeah I just meet my landlord at KwikFil at 5:00 on The first and give him the $1200 in cash. Alot of people will do some sketchy things for a quick $1200. I prefer just above board and tracked.

    Good luck in whatever way you decide.

    2Reply
  • Elizabeth Garcia
    OP
    Westbury, NY 路 Member since 2017 路 30 posts 路 13 votes
    8y
    Wow, @Frank Chin, those stories would definitely give anyone pause on receiving cash. I thought the statement made about receiving cash in the webinar was odd, but after hearing all theses stories, I can see reasons against receiving cash. Thank you everyone for your insight.
    0Reply
  • Belinda Lopez
    Specialist 路 Houston, TX 路 Member since 2012 路 579 posts 路 301 votes
    8y

    We were working to buy two different RV Parks where the owners were accepting the majority of payments in cash.  They were taking in from $27k  to over $32k each month in cash!  Huge security issue and they had to be on-site during rent collection each month. No idea where they were storing all the money but they were not putting it into the banks b/c their books did not show that amount of revenue. They didn't understand why we couldn't just take their word for the amounts and I even was invited to watch the collection process to verify the income.  The problem was that without CPA approved books, we could only value the properties based on actual reported income that was traceable.  So while it was great for them to be receiving all that cash, it really hurt them at sales time.  

    We're looking at some kiosk/drop safe options for a park we're buying that would allow guests to pay on-site.  Folks could still pay cash but it would be like an ATM that verified the cash, recorded video of the person and issues a receipt.

    0Reply
  • Brenda Wright
    Flipper 路 Brooklyn, NY 路 Member since 2017 路 55 posts 路 43 votes
    8y

    Receiving money in cash is only known to you. So in other words, you received 50% of the cash, while the other 50% is 100% disputable in courts making you penniless. 

    Judge Judy would be rolling her eyes at you :) 

    0Reply
  • Nicole A.Pro Member
    Rental Property Investor 路 Baltimore County Maryland and Tampa Florida 路 Member since 2013 路 2k+ posts 路 2k+ votes
    8y

    All of the above reasons to not accept cash are fantastic reasons. Even people who only deal with cash can find a way to pay you in another way.

    If they are mailing you a money order (rather than paying electronically), you need to state in writing that rent must be *received* by X date to not be late. Otherwise, you'll constantly get the "it's in the mail" excuse.

    Plus, why put the responsibility of receiving rent on yourself by essentially forcing yourself to visit in person to collect rent? I'm sure you have better (and more fun) things to do with your time.

    1Reply
  • Shawn Clark
    Investor 路 Middle River, MD 路 Member since 2017 路 191 posts 路 127 votes
    8y

    I actually worry more about the tenant that mails me money orders than the one that makes me pick up cash in person. The USPS is not perfect. I've had lost mail before. Who is to say whether the money order got to me or not?

    In both cases, I keep a written record. The money order tenant gets an immediate excel sheet mailed back to her whenever I receive any rent. And the cash tenants pay on time and get a receipt.

    Someday when I'm working in better neighborhoods I'll set it all up electronically. But for now, money is money. I've never ever had a problem with cash paying tenants. But maybe I'm just lucky. And going there in person, while a pain, also lets me keep tabs on the property.

    1Reply
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