Insurance aganst a non-paying tenant

[Shadonna N.]

Has anyone tried the lease guarantee service from tenant alert.  I would not let the tenant know they have this out but I would find a way to include it in the security deposit/rent.  I wonder how many claims you can file before you get dropped.  Could be part of the packet in lower income areas.

https://www.tenantalert.com/tenant-screening-servi...

[Nathan Gesner]

@Shadonna N. if you have to ask how many claims you can file, you may be in the wrong business.

This company makes money by playing the odds, just like an insurance company. THEY improve the odds by requiring THEIR screening process. If a tenant doesn't meet THEIR qualification standards, they disapprove them. This dramatically reduces the risk of problems and a payout.

Let me show you how it works. I manage 300 rentals. If I charge each of my owners $25 a month, that's $300 a year, which is similar to this program. 

$300 x 300 = $90,000

Let's say my average rent is $1,000 a month and 5% of my tenants are evicted. Let's also say I lose a month of rent and an equal amount in damages. This would result in a financial loss of $30,000 total which means my net gain would be $60,000. That's easy money!

Guess what? I manage 300 rentals and my last eviction was 3.5 years ago. Seriously! This program would cost me over $90,000 to protect me against a loss of $870 from that one eviction. 

This program only makes sense if you absolutely suck at screening tenants or managing your property. Actually, many Landlords would benefit from it! Personally, I think you would be better off learning how to screen tenants and manage your rentals or hiring a property manager.