We’ve looked at the unique brand of risk mitigation offered by Securent on the LandlordsNY blog recently. To refresh your memory, it offers landlords the same protection as a security deposit, but in the form of a surety bond for which renters pay the premium. When landlords need to recover funds to cover damages to their units or for missing rent up to an amount specified in the bond terms, they simply file a claim with Zurich Insurance Group through the Securent website, and then retrieve the necessary funds within seven business days, provided the claim is approved.
There are immediate benefits for both the landlord and tenant. Tenants only have to spend about 18 percent of what it costs for a security deposit; landlords don’t have to deal with escrow accounts, 1099s, or hiring accountants to keep all of this paperwork in order. Furthermore, having a surety bond means less time in court arguing over security deposits – Zurich will now be handling the communications with the tenant regarding damage claims and missed rental payments (at least up to the amount of the bond coverage).
As financial tools, surety bonds provide a great service for both landlords and tenants. However, the surety bonds offered by @Securent can also be viewed as a service that gives you as a landlord an advantage over your competitors. More than just differentiating your properties, surety bonds may become something that younger tenants come to expect, since it is far more convenient than a security deposit. In fact, it may become something that they demand.
The reality is, many tenants don’t have a lot of cash on hand. They may earn more than 40 times the rent, but they probably don’t have much in terms of savings. After having to pay moving expenses, first month’s rent, and last month’s rent, many of them are getting close to scratching the bottom of the barrel of their accounts. If they could avoid having to come up with the full amount of the security deposit, many would take the opportunity. For them, it would be easier to pay a premium that costs a few hundred dollars rather than come up with a (few) thousand dollars that they may or may not get back when their lease expires. This is precisely what a surety bond allows tenants to do. Furthermore, should a tenant want to extend their lease, they just pay a prorated premium. Should you raise the rent $50, their premium for the year would be a single payment of $9. For those who are on the fence about whether or not to remain in the same apartment for another year, this may prove to be a major incentive to renew. For landlords, this means lower acquisition costs and fewer vacancies.
On top of reducing the amount of money that tenants must come up with when they move in and improving your bottom line, Securent also offers you a platform that you can use to screen tenants, provided they set up accounts on Securent’s website. This affords you the opportunity to improve the reliability and quality of your tenants. Within the next year, the Securent platform will also offer data analytics for members’ portfolios. This means you will be able to use a single platform to screen tenants, increase occupancy rates, and file claims—all while getting a competitive advantage because you are providing a service that tenants want and may not get elsewhere.
The best part about Securent’s surety bonds for landlords is that the tenant pays the premium. You get all of these services, plus the relief of not having to be dragged to court over security deposit claims.