Why landlords don’t accept credit card payments

When you become a rental property owner, there are many new things to learn. From working with tenants to the upkeep of the property, there is a lot to cover. For most real estate investors, a property management team is hired to handle the daily work so that the investor can focus on their business. When you own a residential rental property, you will find that most landlords do not accept credit card payments for rent due to a number of factors. Find out why it’s smart to avoid credit card payments and accept only cash or checks for monthly rental payments.

Payment Must Be Provided by the Legal Tenant Alone

There are certain rules and regulations in place that property owners must follow when acting as a landlord. In most areas, the individual who paid the rent is considered the legal tenant. When it comes to credit cards, an individual making the payment via the card may have a co-signer for the card. Based on the law, the co-signer may be considered the tenant even if they are not living on-site. This can complicate the relationship between the landlord and tenant, so it is best overall to avoid this payment type.

Liability of the Landlord

Monthly rent is due on or before a specific date set by you. When a credit card is used for payment, the payment may not actually be remitted until a specific date, which can be after the rent is due. If a dispute should arise with the tenant, this could create a problem for you as the landlord and the tenant. The tenant may be accused of not paying their rent on time or be handed an eviction notice. The landlord can then be accused of accepting a late payment without consequences, by allowing the tenant to pay late without paying any extra fees or being evicted.

Credit Card Fees

When you are the facilitator of payments via credit card, you may have to pay an interchange fee. You are in the rental business to make money and do not want to have to pay additional fees just to process a payment. Such fees can be 2% or higher. Your profit margin may already be small so adding in an additional fee is only going to take away from profits. Today, this is a big reason behind not accepting credit card payments. You want to be able to make money with your rental properties and avoid any unnecessary fees.

Be Upfront about Payment Options

When you are signing an agreement with a new tenant, be sure to be upfront about payment options for monthly rent. Your residential property management team in Kitchener will need to alert any potential tenants of the methods of payment you accept, such as cash and check. The renter needs to know how to pay and the specific dates in which payment is due to be sure to make payments on time.

At Latitude Properties, we facilitate your tenant agreements with payment specifics so every renter knows what is expected at time of payment. We focus on the basic payment methods you wish to accept so your tenants can pay on time, helping you to see a profit.