Alternative To Security Deposits
Owning a rental property can be a challenging yet rewarding process. For many first time landlords, the list of decisions you are responsible for seems endless. How much to charge for rent? What upgrades should I add to the property? What questions should I ask to screen the tenants? I would venture to guess a question you never stopped to consider is whether you should charge a security deposit.
What if not requiring a security deposit and working with a third party instead could not only attract more qualified tenants, but make you money in the process? Here are three reasons why working with a third party company can actually be more beneficial than charging a security deposit.
1. Complete coverage for damages
The biggest argument for security deposits is that it protects you against any damages that occur while a tenant is occupying the home. Its standard practice to charge the first month’s rent to cover these costs but in most cases this deposit must be refunded by law after a set period of time. This leaves the landlord without any sort of protection for the rest of the term. With a third party company, they are able to offer protection for the entirety of the lease term, offering a peace of mind to damage prone properties.
2. Attract more tenants
With the current financial climate, many citizens are being a lot more cautious with their finances. Renting can be a last resort for some people and though they may have a great payment history, they may not be able to afford to save hundreds extra to cover the security deposit. Third party companies such as Jack and Landlords breaks up this lump sum into smaller more manageable fees that can be paid out over the first year. This is a very attractive proposition to many families who otherwise would not be able to afford to move in right away. It also sets your property apart from every other listings on the market giving you a slight edge.
3. Increased retention
After first year of the lease, the tenant no longer has to pay the small fee. This means that for the second year, their rent would actually be at a lower price than the first year, which is a big incentive to renew the lease. This holds true even with a 4% rent increase if the market is doing well. This creates a win-win situation and no one can resist a good deal!
Companies like Jack & Landlords walks you through the entire process, creating custom solutions just for you.