Should I accept credit card payments as rent?

Written by Sarah Block on . Posted in edited, For Landlords, paid, Rent & Expenses, Step 6 - Applications & Screening, Step 9 - Manage Lease & Collect Rent

Should I allow rent with credit cardsUsing credit cards can be a tricky game, especially when using them for rent payments.

Do you earn points or miles for travel when you use them? Do you only pay the minimum each month? Or do you pay cash and focus on staying debt free? It gets even trickier when you are deciding whether to use credit cards for large recurring bills such as rent.

Using a credit card to pay rent could be a great way to streamline payments when your monthly expenses and paychecks don’t line up, or it could be a good way to get into major debt.

We’re going to review the pros and cons of using a credit card to pay rent.

Pro No. 1: Evens out the cash flow ebb and flow

Bill due dates often don’t fall in line with paycheck dates so cash flow can become an issue. You may be flush with cash during week three of the month but going in the red week one. Paying rent with a credit card could be a way to avoid that issue. If you set up your bills to be automatically paid with a credit card and automate paying the credit card on pay dates, this method could smooth out cash flow issues throughout the month.

Related: 6 warning signs when screening a tenant

Pro No. 2: Points and miles

According to Million Mile Secrets, paying rent with a credit card to earn miles and points is a method to earn extra points. Many credit cards provide perks such as early release concert tickets or a special airport lounge if you spend an annual minimum. Paying rent with a credit card is an option to meet that minimum if you have great perks to offset fees.

Pro No. 3: Builds credit

Someone with little to no credit could build their credit score by paying rent with a credit card. Each time you put the rent on the card and pay it off, you improve your credit score and prove your creditworthiness.

Con No. 1: Can lower your credit score

If you are not paying off your card every month, not only will your debt add up quickly, but your credit score can suffer. For those with a low credit limit, it won’t take long for your debt percentage to rise. When you are using a high percentage of your available credit, your credit score can go down, which hurts you anytime your credit is checked. When you are looking for a new car, lease, or credit card, a poor debt-to-credit ratio could raise your interest rate or result in a rejection.

Con No. 2: Credit card fees

When rent is paid with a credit card, there will always be a fee. Cozy has a standard 2.75% credit card processing fee. Look at your bills, points, and credit card perks to determine if the 2.75% fee is worth it. Rent that is $1,500 a month would result in a $41 fee each month. Are your points worth it? On the other hand, if you couldn’t pay rent on time without a credit card, would the $41 be less than a late fee?

Related:  My tenant won’t pay late fees, now what?

Con No. 3: You’re playing with fire

Do you have a history of high debt? If so, it might be a bad idea to use a credit card to pay rent. It’s easy to pay the rent with a credit card, but it might be difficult to pay the card. This could cause your debt to increase exponentially. Without the ability to pay the credit card off each month, not only will you be paying the processing fee, but also the interest rate. Your debt can get out of control, depending on your interest rate.

The landlord’s perspective

As a landlord, I would accept credit cards. Before accepting a tenant, landlords complete a credit check, reference checks, pay stub verification, and background checks. We are fully aware of the financial lives of our incoming tenants.

If you are comfortable entering a lease with a new tenant, then trust that they can decide whether paying rent with a credit card makes sense for them.

How to protect your tenant’s sensitive information

Written by Chris Deziel on . Posted in data storage, edited, For Landlords, frugal landlord, paid, privacy, rental maintenance, Software, Step 9 - Manage Lease & Collect Rent

The massive Equifax data breach of 2017 revealed that identity thieves are constantly updating the methods they use to steal sensitive information—and they’re getting better.

That should concern any landlord or property manager who collects personal data. Keeping credit card and Social Security numbers out of the hands of thieves calls for advanced IT skills beyond the scope of many property owners and managers. It’s one reason you should consider working with third-party online property management agencies.

1. Use firewalls and passwords

Storing the data you get from tenants in an unprotected file on your computer is like leaving a large sum of money on the hood of your car while you go shopping. If someone doesn’t steal it, you’re having a very good day.

Tenants and potential tenants shouldn’t have to rely on luck. At the very least, you need to enable a firewall on your computer to protect their data.

By itself, however, even that won’t necessarily keep out a determined hacker. You can add a second level of protection by using only a password-protected Wi-Fi connection, but this may mean keeping a second laptop for use in coffee shops and other public places.

2. Understand the malware factor

Hackers continue to devise new ways to lure you to fake sites and persuade you to click on links that download malware onto your computer. Once their software is past your firewall, only your anti-malware software stands between it and the sensitive information you’re storing. Keep your anti-malware software up-to-date. But even if you do that, there’s no guarantee that hackers aren’t one step ahead of you.

To show how easy it is to lure viewers, software engineer Nick Sweeting created a copycat Equifax site after the data breach. It was so convincing that some Equifax employees were fooled into navigating to it. They were “Rickrolled” (re-directed to a video of Rick Astley singing “Never Gonna Give You Up”) when they clicked on one of the tabs—a favorite internet prank. The stunt underlined the disturbing fact that fake sites can persuade viewers to click through. Those that do could potentially download malware without ever being aware of it.

3. Call the pros

It’s better to hire a lawyer than trying to represent yourself in court. In the same way, you can manage your own files, but it’s better to use an online property management system, the most reliable way to avoid having your data compromised. For example, Cozy protects you in these ways:

  • Transmits data using only the secure HTTPS protocol
  • Limits the amount of data it stores (Cozy never stores the results of background checks or credit card numbers.)
  • Encrypts all data it stores on secure servers
  • Submits to regular audits by third-party firms to ensure security

Cozy also only shares information with trusted third parties as required to provide services, prevent fraud, or satisfy legal requirements. All this security comes with an easy-to-use interface.

4. Go it alone

Property management companies charge a fee for the services they provide. If your budget won’t accommodate that, and you choose to store data yourself, you may find the following tips helpful:

  • Access data only when using a secure, password-protected Wi-Fi network.
  • Install high-quality anti-malware software, and set it to update automatically whenever an update becomes available. Set up a firewall.
  • Set up two-stage authentication. For example, have a verification code sent to your mobile phone whenever you log into your computer.
  • Avoid storing credit card and Social Security numbers. If you must keep them, store the numbers separately from the corresponding names and addresses. This may involve establishing a system to link them, which you should keep in yet another location.
  • Activate a tracking/recovery system, such as Lojack or Find My iPhone. This gives you and law enforcement officials a better chance of recovering your computer if it gets lost or stolen.

5. Take privacy seriously

Landlords must provide a safe and secure place for their tenants to live, and they have a responsibility to protect any sensitive information they collect. The consequences of identity theft can be as devastating as a physical accident. If investigators trace the theft to negligence on the part of a landlord, they could be liable. If you don’t have the time or skill to keep data safe, companies like Cozy can help.

New! Share your rental documents

Written by Lucas Hall on . Posted in For Landlords, For Renters, General, Step 9 - Manage Lease & Collect Rent

We’re excited to announce that now you can share documents, lease agreements, move-in checklists, and more with your tenants in Cozy!

At Cozy, the company behind Landlordology, we build tools to make life easier for our customers and we listen to their feedback. Landlords have been asking us to make it easy to store and share essential rental documents with their tenants, so they can be better organized and more transparent. Now they can.

Quick and convenient

It’s easy to add and share rental documents in Cozy. When you set up payments, you can upload any related documents, which will be there for your tenants when they login to Cozy.

Every time you share a new document, all the tenants on that lease will be notified by email. Then they can access the shared documents from any device. Tenants will conveniently have the lease at their fingertips, so they won’t have to ask you for it again and again.

State law requirements

Every state has its own landlord-tenant laws. Some states have laws to ensure that tenants always receive a copy of the lease. For example, California Civ. Code §§ 1962(4) says that a landlord must provide a copy of the lease to the tenant within 15 days of its execution. In Delaware, a landlord must provide a written copy of the agreement, free of charge (§ 5105 (b)).

Cozy makes it easy to share a lease with your tenants securely and for free.

To learn more about what state laws require, check out our state law rental guides.

Your tenants will thank you

Most tenants want to be self-sufficient. They don’t want to ask you multiple times for a copy of the lease, or find a place to store a stack of important rental documents.

By using Cozy to send and store these documents, you’ll help foster trust and transparency with your tenants. It’s a great way to start a relationship with a new tenant, that hopefully will help pave the way for a long-term resident who treats you and your property with honesty and respect.

Foundation for success

At Cozy, we make renting easier for everyone. Hundreds of thousands of landlords have built their rental business with Cozy, and now they have another tool to make their lives easier. Document sharing in Cozy is one more way you can create a better, more efficient, and more profitable rental business.

If you’re not already using Cozy, give it a try. All our core features are free for landlords, including collecting applications, screening tenants, and collecting rent online.

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