Sure Deposit: Good? Bad?

[Erick Caffarello]

Hi folks!

The complex I used to work at had previously used Sure Deposit before moving away from it (for an undisclosed reason).

Has anyone here had experience with Sure Deposit?  It sounds like a great program.  Instead of a tenant paying a $1200 security deposit at move in, they pay a smaller "bond" which covers me in the event they default or are evicted and covers up to a certain threshold for damages.

I've done some research on google, and some people love it, some people hate it.  What could someone hate about it?  If a tenant defaults, rather than chase them down, you file a claim and supposedly the insurance company (Assurant) sends you a check for the damages and then pursues the former tenant for collection.

I only own four properties, so from what I read, some people have said you have to own several units in order for it to work for you, while others say it works for them.

Of course, when you talk to Assurant, they sing the praises of the program...why would they say any different?

Recently, I was lucky, very lucky!  The tenant skipped, but has a good job and her wages have been garnished ever since.  It usually never happens this way.  I want to make sure I do everything in my power to reduce property damage/delinquency.  

Your feedback would be greatly appreciated.  Thanks much.

Erick

[Nathan Gesner]

Who makes a better tenant? The one that can afford a $1,200 deposit or the one that can only afford the $300 bond?

The bond is basically like an insurance program.

Tenant wants to rent a house for $1,000. Instead of a $1,000 deposit, you charge them a non-refundable $250 bond which is much more affordable for the tenant and you get to keep the money no matter what. Perfect, right?

The tenant is getting ready to move out. He already knows he's not getting the $250 back. He fails to pay the last month's rent, has a broken window, the whole place smells like cat urine, and he didn't do any cleaning. You suddenly have $2,500 in expenses but you only collected a $250 bond. What do you do? Take him to court or send him to collections but you'll never see a dime of it.

If you have 100 units this can work to your advantage. If 100 tenants pay a $250 bond, that's $25,000 a year. Most tenants leave their homes in good condition so a small percentage of the bond money is applied to cleaning, repairs, or rent and everything left over is pure profit. This only works if you have a large number of units and run a tight ship with decent rentals.