rent via credit card

I was reading this newsletter the other day and it said that many landlords now require tenants to pay rent via credit card.
During tenant screening, you explain that they must provide a card number and the monthly rent is automatically deducted on the first or whatever date of each month.
In effect, you transfer the burden of collecting rents to the credit card company, since the landlord will get the rent money automatically.
Other than the fees associated with this, (whatever they may be), It seem like a cool idea.
Any thoughts on this idea? Yay or Nay??

There are also some companies who do direct deposit for a fee as well. If I was a tenant, I wouldn’t like to be required to pay via CC. A good portion of our tenants don’t have CCs and wouldn’t be able to do this anyway. We get a lot of money orders in the mail as many of them don’t use checking accts either. So yes you would get your rent automatically, but you would also be limiting your tenant pool. Guess it depends on what kind of price range your property is in. This might work in a strong middle class to upper middle class area.

They can challenge the charge and have it reversed. I can see a few tenants doing this when they are ready to move out, getting 2-3 months charge reversed.

Then, if word goes out that it can be done, it will become common practice. Tenants have a grape vine that is quite efficient.

I used to have a landlord account for all my electric, where the power was put in my name automatically when the tenants moved out. But word got around that tenants could cancel electric service a month before they moved. The landlord would end up paying for it, and not know they had done it until after they were out.

It got so that all tenants were giving it a try. If my tenants try it, they get to sit in a dark house.

Different power companies handle it differently. We have the LL program for our apartments. If someone moves out and puts in an order to shut off the electric, it will automatically revert to us. The nice thing is I get auto generated emails when this happens as soon as the order is put in. So the difference is that I’ll know immediately if someone is trying anything funny. I also got an email the other day of a final notice prior to shutoff for a tenant. In that case, it doesn’t revert to me. It just gets shut off until they pay.
Without a system like this, I can see where the LL program could be abused.

Thanks guys for the input…

This is more right than the rest of the advice. Credit card companies don’t know the state housing laws. They know retail laws. If the tenant has a kid that throws a doll down the toilet and stops it up and you tell him that he needs to pay to unstop it and he wants you to pay for it he can call the credit card company and dispute his rent for the month and the credit card company won’t know what the law says so they just reverse the charge and make you prove the rent has nothing to do with the maintenance of the unit. You don’t want them in your business.

I use a deposit card. It looks like a debit card without the Visa logo. All they can do is deposit with it. They can’t check balances transfer cash or withdraw. Accounts are free at Chase so I open one for each house with a deposit card for each. I make the pin number the house address. So the house at 4915 Main St has a pin of 4915. I know it and they don’t have to memorize a different number that means nothing to them. When the money is deposited after the check clears I transfer the money to my main account to use. An added benefit is that way if the check bounces it only messes up its own account.

Interesting idea, Bluemoon–the deposit card.

Here we accept all credit cards–Visa, MC, Discover. We signed up for American Express when we had a couple of corporate renters want to use their business AmEx card for the rent. AmEx costs more for the business owner to accept.

Card fees are about 3%. It varies card to card, with government cards usually costing the most in fees.

When we started accepting CC’s, it boosted our creditability as a legitimate company. Now lately it has been useful when the penniless working traveler arrives–I’ve been out of work for seven months! Can I pay with my first paycheck?"

“Okay, we’ll hold your security deposit on your CC but not run it. We’ll run your first week’s rent on your card until you get your paycheck”.

The tenant is grateful for the break, we are grateful for the full unit.

If a rental business grows beyond a few Mom/Pop units, it may be time to accept Credit Cards. They are another tool to keep the rent money flowing in.