Zero Deposit for Security Deposits

[Bruce Gardner]

Background - there are a couple companies out there who provide special insurance for no security deposit.  One is called "Zero Deposit" based in Europe, another is Rhino.  In essence, tenants don't pay a security deposit, but instead, they pay a monthly "premium" to the company.  It is NOT renters insurance, it is a unique policy that tenants pay for, but when they move out if there is something that a classical security deposit would normally pay for, it gets covered for the landlord.

Rhino appears to be operating in the U.S., and Zero Deposit is in Europe.  My question for you expert landlords:

-  What are the pitfalls of a Landlord implementing this on their own?  In other words, give potential tenants two options:  Option #1, classical security deposit, option #2 - No security deposit required, and instead they pay an extra $$/month NON-REFUNDABLE in perpetuity.

I'm considering having THREE options:

Higher-Risk Tenant:  High Security Deposit (1.5 to 2 months rent), for those on the lower end of the acceptable background reports.

Normal-Risk Tenant:  Normal Security Deposit

Low-Risk Tenant:  High end of background check, AND, requires existing home walk-thru:  NO DEPOSIT, but $$/month higher rent.

Thoughts?

[Thomas S.]

Requiring a full payment up front is part of your screening process. If they can not aford full deposit and first months rent they are unaceptable. Don't waste time trying to reinvest the wheel.