Five Benefits of Using Bitcoin to Pay Rent – Bitcoin Magazine
Jenna Hall is a content marketing coordinator at Redfin. Redfin does not provide legal, tax or financial advice. This article is for informational purposes only and is not a substitute for professional advice from a licensed attorney, tax professional or financial advisor.
Over the past few years, an increasing number of companies around the world have started allowing customers to pay for their products and services with bitcoin. While bitcoin used to be considered a niche asset, it has now emerged as a very popular currency and is being treated as a viable alternative to cash and credit for many large retailers. Now that you can use bitcoin to buy almost anything, some are wondering how they can use their digital currency to buy a home or even pay their rent.
As bitcoin becomes more intertwined with real estate transactions, you may be wondering if paying rent with bitcoin is a good option for you. Whether you’re a landlord or tenant, here’s what you need to know.
How does it work?
Currently, there are two ways landlords can collect bitcoin rental payments. The first is by using a property management platform that leverages technology to process bitcoin payments. The second is by simply transferring peer-to-peer with the tenant.
For payments made through property management software, both the tenant and the landlord must have an account with the platform. The landlord can then send the tenant a payment request and the tenant can choose how they want to pay. They can transfer bitcoin directly through a brokerage such as Coinbase or scan a QR code for the payment request and pay through their digital wallet.
It is important to note that most property management platforms do not have any digital currency, they simply convert the coins into US dollars and transfer payment to the landlord as such.
Without a platform, tenants can still rent an apartment with bitcoin by transferring the holdings to the landlord’s digital wallet. Landlords and tenants should keep in mind that peer-to-peer bitcoin transfers leave no paper trail. So it’s a good idea to create documentation that includes proof of payment records to avoid potential problems.
Five benefits of using Bitcoin to pay rent
Whether you are a landlord or tenant, there are many benefits to using bitcoin for rent payments. Here are the top five benefits to help you decide if it’s a good option for you:
More flexibility
Tenants are looking for properties that give them more payment flexibility. According to a recent Motley Fool study, more than half of tenants surveyed said they would pay more in rent to have more convenient payment options.
Payments with bitcoin can be fully digital and made on a phone, computer or tablet. Unlike traditional banks, bitcoin payments can be made and received 24/7. This means that landlords do not have to wait until business hours or after a holiday weekend to receive their rent payment.
Easier payments for those who rent abroad
Renting abroad can be difficult, especially when the landlord and tenant use different currencies. Transferring money through traditional means likely means paying wire transfer fees, foreign transaction fees and currency conversion fees. On top of that, landlords and tenants have to consider exchange rates and the time lag it often takes for money to be transferred internationally.
However, bitcoin can be used internationally instantly with little or no fees, saving both landlord and tenant time and money.
Fewer transaction fees
Most online rent payment platforms charge a fee for paying rent by credit card. This fee is typically 2.5%-2.9% of the rental amount and is paid by the tenant. Even third-party platforms like Venmo and PayPal charge a roughly 3% fee for business transactions like accepting rent payments, which landlords must pay when they accept payments.
Renters and landlords can avoid these transaction fees entirely by transferring bitcoin directly, which can save each party hundreds or even thousands of dollars over a few years.
If tenants and landlords choose to transfer bitcoin through a property management platform that supports bitcoin transactions, they will likely still have to pay transaction fees. However, these fees are meager compared to credit card processing fees.
Added tenant privacy
Bitcoin payments are great for renters who prioritize their financial privacy. Bitcoin uses anonymous addresses that change with each transaction, so payments require no personal information, traceable credit card numbers or account numbers.
Given the pseudonymous nature of the blockchain, bitcoin payments are ideal for those who are privacy-conscious and wary of sharing their personal information.
Potential first mover advantage
Bitcoin is becoming increasingly accepted in mainstream markets, with many companies starting to accept bitcoin as payment. However, there is still some work to be done before it becomes an economic norm.
Landlords who are forward-thinking, tech-savvy and want to stay ahead of upcoming trends may want to consider being early adopters. Potential renters may see the value in a property that accepts bitcoin and be more inclined to rent with those properties.
What you should keep in mind when using Bitcoin for rent
Here are some final things to consider if you plan to use bitcoin for rent as a landlord or tenant:
Payout versus holding
If you are a landlord that accepts bitcoin, you have the choice to either withdraw or keep. It’s a good idea to consider the pros and cons of each. Bitcoin is known to be volatile and the amount a renter pays in bitcoin can change quickly. Landlords should research their financial goals and consider talking to a financial advisor to see which option works best for them.
The rental amount may fluctuate
Since the value of bitcoin fluctuates, the monthly rental amount will also fluctuate. This means that the amount of bitcoin you give or receive for rent can change from month to month.
Keep the documentation
Given the nature of bitcoin that makes it more challenging to trace, landlords and tenants should protect themselves by keeping records of rent payments using bitcoin to the best of their ability. Assume that landlords and tenants plan to transfer peer-to-peer. In that case, it is a good idea to consult with an attorney to ensure that the proper paperwork and documentation of a rent payment agreement is created.
This is a guest post by Jenna Hall. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.
