Cash is becoming extinct and is costly to accept for rental payments. So what are some alternative rent collection methods for real estate investors, especially for tenants that do not have bank accounts?
Deposits at many U.S. banks have dropped as fees have been raised, criteria for opening an account has tightened and damaged credit persists. At the same time, experienced landlords know that accepting cash payments is extremely expensive. First, there is the high risk of fraud and theft, the cost of collection, and a lot of extra time and hassle. Of course, it won’t be long before cash becomes an antique. So what is another alternative rent collection tactic?
You could have tenants make deposits directly into an operating account at a local bank if they don’t have an account of their own or you don’t want to deal with the hassles of checks.
Money orders and cashier’s checks are being used as alternative rent collection methods, but suffer many of the similar issues as dealing with cash.
Paypal can also be a great alternative online payment gateway that can provide security, ease of use, ease of accounting, and gives tenants more flexibility in how they pay. Even if you are not able to open a bank account, you can get a Paypal account and debit Mastercard.
Finally, if tenants can’t open bank accounts or make it to a branch to make a deposit, there are now endless prepaid credit card options which can be used to pay over online platforms. Appropriate collection terms can maximize profits and establish long term wealth building.
