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Bitcoin & Cryptocurrency for Landlords: Should I Accept Rental Payments in Bitcoin?

Chances are, you’ve come across information on Bitcoin or other cryptocurrencies in the news lately. It’s no wonder the digital currency is such a hot topic – after crashing in value, the Bitcoin market seems to be recovering quickly with an increase in value of over 120% since the beginning of the year. With more players in the cryptocurrency game than ever, many landlords are debating getting involved themselves, or are even considering accepting rent payments in Bitcoin.

In 2013, a New York-based property management company became the first on the market to accept rent and maintenance payments in Bitcoin. In the following years, many other landlords and property managers have jumped on board the Bitcoin train as well. So, is it time for you to follow suit? Here are some of the pros and cons of accepting Bitcoin as payment as a landlord.

Pro: Faster and Cheaper Than Traditional Banking

Bitcoin is an open financial system, meaning payments using Bitcoin can be made anytime, anywhere, even if there is no traditional banking system. Bitcoins can be spent in the same manner digital money systems such as credit cards and PayPal operate – from your mobile phone, computer, or tablet. While still experimental, Bitcoin is even slated to become transferable through satellite and radio waves, meaning Bitcoin users can literally make payments from almost anywhere on the planet. Offering this payment option to your tenants could prove to be beneficial for renters who travel frequently or who are planning a trip to an isolated destination. Compared to other digital payment methods, Bitcoin tends to have lower transaction fees and no foreign transaction fees.

Con: Lack of Regulation

There is currently no government body or other organization monitoring the Bitcoin market and ensuring it retains its value. Unlike cash, silver, gold, or any other tangible commodity, Bitcoin is made up of digital information that has little to no regulatory oversight. This can cause significant and unpredictable shifts in value – in both directions.

According to a report from Bloomberg, a mere 1,000 people own 40 percent of the Bitcoin market. All it would take is a handful of these 1,000 people to decide to cash out, potentially causing a ripple effect where others decide to sell, in turn causing the value of Bitcoin to come crashing down. In fact, this is exactly what occurred in January 2018 during the most recent crypto market crash. Technically, these stakeholders could manipulate the market by bulk selling their Bitcoin, causing a value crash, and buying back the same Bitcoin at a much lower price. This is called collusion and is forbidden in traditional money markets, but because of the lack of regulation, there’s not much that would prevent this from happening in the cryptocurrency market.

Pro: Added Security for Payment Makers

Bitcoin can protect the identity and money of your tenants, which may be appealing to some potential renters. Because Bitcoin uses anonymous addresses that change during each transaction, payments do not require any personal information and do not require consumers to provide credit card or account numbers that could be stolen.

For landlords using software designed for property management, you likely accept ACH (electronic check) and credit cards for rental payments. These transactions are traceable, legal and backed by major banking institutions, but each account is clearly associated with a specific tenant. Renters who prioritize privacy when it comes to their finances will appreciate the option to make payments using Bitcoin.

Con: Taxes Could Be Tricky

Paying taxes as a landlord and understanding the related filing obligations is already a stressful process. Throwing cryptocurrencies into the mix won’t make tax season any easier on landlords. The IRS doesn’t treat Bitcoin and other cryptocurrencies as money; instead they are treated as assets, which introduces additional tax consequences. Assets may require reports not just on your income, but also on the product you received, what it’s value was when you obtained it, and what it’s value was when/if you turned it back into cash. This entails three IRS reporting transactions as opposed to one for accepting cash. You’ll also have to keep detailed records of the exact value of any Bitcoin you received at the time you receive it and again at the time you convert it to cash.

Pro: Increasing Acceptance in the Marketplace

As much as the cryptocurrency market has its ups and downs, it’s not going to disappear. Bitcoin is becoming increasingly accepted in mainstream markets and many merchants are beginning to accept Bitcoin as payment. Major outlets like Overstock, Microsoft, Expedia and Shopify have all started accepting cryptocurrencies and this list is expected to continue to grow as things progress. Cryptocurrency started as a niche market and has expanded into an immense industry, though there’s still some work to do before it becomes a financial norm. Those who want to remain at the front end of the trend curve, and are forward-thinking and tech-savvy, may want to consider being early adopters.

Con: Courts Don’t Have a Perfect Understanding

A cryptic Bitcoin receipt can be difficult for average people to understand and trace, despite the fact that the technology is inherently transparent. There are programs that allow people to track down transactions on blockchain (the protocol that underlies Bitcoin), but it is quite different than normal banking transactions to which most are accustomed. This can add a layer of complexity to any legal proceedings, and extra hoops to jump through when providing proof of payment (or not), ultimately prolonging things like an eviction process.

As you can see, there are pros and cons to accepting Bitcoin as a rental payment method if you are a landlord. Providing a new method of payment can be appealing to some tenants, and if you are looking for a new market to engage with expendable money, Bitcoin may be a good option for you. However, the market doesn’t come without its risks, so it really has to do with how adventurous and progressive you are in your role as landlord.

The post Bitcoin & Cryptocurrency for Landlords: Should I Accept Rental Payments in Bitcoin? appeared first on GeekEstate Blog.

 As an agent who's an expert in this local area, I bring a wealth of knowledge and expertise about buying and selling real estate here. It's not the same everywhere, so you need someone you can trust for up-to-date information. My background consists of a variety of talents & interests, from History to computers & Outdoor activities. On my free time you’ll find me golfing, hiking, tending to my Ranch, or spending time with my Family. I enjoy researching a multitude of subjects, music, real estate & web development, to name a few. My personal goal is to help my clients buy or sell to make their real estate dreams into realities. There is only one constant in real estate, service wins.   I am passionate about providing a level of service that stands out from the competition. Exceptional service doesn't necessarily mean working more hours, it means leveraging technology to work smarter. Finding out what best works for my client's needs.   There is no better feeling than helping a family find their perfect home.   Serving Cochise County and Beyond!!

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