For decades collecting a security deposit has been my modus
operandi. Before a tenant moves in you collect money equal to 1 months
rent as
the security deposit. You may try to collect 2 months but that is very
hard to
do and, I’ve found, the ones who can afford that aren’t the ones I need
to
worry about.
So you need to collect $4,050 from your new tenant who just
paid their last month’s rent and haven’t received their security
deposit back
from where they are living now.
“Can I pay you $2,050 next Friday and then the other $2,000
2 weeks after that? But can I move in next week?”
“I’ve got $400 right
now and I’ll have $800 more this
Friday. I can get $850 from my mother next week. Then the week after
that I’ll
give you $900 and the following week I’ll give you the last 1,100”
“Do I have to pay a whole month’s rent up front if I’m
moving in on the 15th? Can’t you prorate
it?” (Yes but you still
want a full month’s rent up front)
The scenarios could go on from simpler and more complicated.
But there is one thing you should consider. How far will that $2,050 security deposit
go?
If you have to evict in Baltimore City here is an idea of
time
Many landlords serve notice of Failure to Pay, which would
add however many days you give them to pay, but this is not required
for
Failure to Pay
1st
time to court (in Baltimore City the tenant can pay you at the last
minute 2 times before you can really evict them on the 3rd time)
After you file and pay for your complaint it will take the
sheriff 5-15 days to serve the tenant and the court date will be 5-15
days
after that (10-30)
You’ll receive a judgement usually that day, but could take
4 days.
Eviction is scheduled 14-60 days after judgment
Looking at a Calendar|
Oct 2 – Rent Late
Oct 5 – File for Failure to pay
Oct 20 – Sheriff served them
Nov 5 – Court Date – you win
Dec 5 – You got a date for the physical eviction
So you lost October’s rent, November’s rent and December’s rent. Plus there may be damage in the property.
So that $2,050 Security Deposit won’t cover all of the loss.
Enter Security Deposit Insurance or Surety Bonds.
SDI is a policy that the tenant pays for and covers you for much more than 1 months rent. Usually 2 months of rent plus damage. And that rent and damage coverage can be more, if you choose.
SDI is a surety bond, and the premiums that the tenant pays are not refundable.
You don’t collect their cash security, you get an surety bond from an insurance company (Oh no, I’ve dealt with insurance companies.)
I haven’t had to make a claim yet but here’s the thing, the claims they pay out are not from their pockets. The tenant is still on the hook for any claims you make. So the company will go after the tenant for the money they pay out.
Before we move forward let me say taht I MAKE NOTHING FROM THESE COMPANIES. No payments, no affiliate links, nothing.
So let’s look at the companies offering these and the cost to the tenant.
Rhino you need at least 150 units
Suredeposit you need at lest 100
Rentsense Max coverage is 6 weeks of rent
Jetty you need at least 100 units
LeaseLock you need at least 1000
epremium Max coverage is 2 month srent and you need to have property management software they can access
leapeasy.com Usual coverage is 3x rent and $1000 for damage
Leapeasy and The Guarantors.
Leapeasy has 2 plans for the tenant, monthly or lump sum
The Guarantors just has a lump sum.
Both companies cost to the tenant is similar, though I have found The Guarantors cost a bit higher. And they both have a cap on damage coverage. I believe both are $5,000.
The cost for that coverage would be about $1,020-$1,120. (A lot less than the $2050 psecurity depsoit, and you get a heck of alot more coverage.) And with Leapeasy it could be monthly payments of $85-$94 a month for the tenant.
"What happens if they cancel the policy." They would be a breach of lease, and you as the landlord can pay those monthly premiums to keep the policy in place while you evict. Some landlords chose the single payment plan each company offers, it’s a little more involved for the tenant (and there is a possibility they won’t be accepted) but removes the possibility of cancellation during the year.
I did this research for myself. I make nothing from Leapeasy.com or Theguarantors.com. Please feel free to check them out.
For those who are my clients I actually go through the whole process with those companies on their behalf.
It’s something to consider.
https://www.doorloop.com/laws/maryland-eviction-process
https://youtu.be/rGNyxZBD7S4