Does anyone use a vendor that provides the option for tenants to purchase security deposit insurance? Rhino and TheGuarantors are two companies I’ve seen that offer it. The tenant pays a monthly fee to the insurance provider (as little as $5/mo but likely much more for low credit) and the insurance provider covers their security deposit in the event they owe the landlord when they leave. Sounds like a great program…assuming the landlord actually gets paid if and when the tenant skips out.
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I use Rhino with our single family homes. I am a broker and manage. You might consider creating a self insurance program. I think if you say roughly about $11 per thousand dollars of rent based on credit you might get the tenants to buy into it. If your rents are lower this still may work. If I did this I would use a separate entity from the one managing or collecting the rent. This way it’s separated.
There are others beside Rhino but Rhino is really simple and from what I hear they pay out. I just started with them about 4 months ago. If the tenant fails to pay for the term of the lease I believe the lease is still covered for that term however they will not renew the tenants Rhino policy, and then you would have to cover them back to a security deposit.
One thing we are also doing is charging an up front non refundable cleaning fee. We make sure the home is clean prior to the tenant moving in. So when they move out we use the funds to clean the home. This allows them to pack, move and sweep at 8 pm on the 31st of the month without trying to rush a cleaning job. Based on the cleaning company we use 2 Maids a Mop the cleaning is roughly $500 per 3 bedroom 2 bath home. So we round up to $600 dollars and add in another $200 if unit has carpets.
You might also do a non refundable redecorating fee at a similar amount and then do a small security deposit. This way they get something back vs saying “I paid all this money and they kept it.” Keep in mind none of these non refundable fees are in our lease. These are part of the move in cost upfront they have to pay prior to getting the keys to the castle. All the is disclosed in our ads, are application process and nothing is smoke and mirrors, we are very transparent.
Hope this helps in answering your questions
Matt Fonk Tampa FL