No Security Deposit
How could No Security Deposit be better for the Landlord?

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.

But, as you know, collecting that much money can be difficult for the tenant. Let’s say your rent is $2,000 a month and your security deposit is $2,050 (never have the security deposit the same as the rent).

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 15
th? 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 1 – Rent Due
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  Usual coverage is 3x rent and $1000 for damage Min coverage is 2x rent and $1000 damage

So I spent quite awhile tracking down companies for landlords with less than 100 units. I was looking for myself. I only found 2 that don't also require a particualt Property Management Software.

Leapeasy and The Guarantors.

Both have a credit score minimum, right now it is 550. The Guarantors have been known to go below that.

Leapeasy has 2 plans for the tenant, monthly or lump sum
The Guarantors just has a lump sum.

So let’s say you want 3 months of rent coverage and an equivalent amount in damage. $6,000/$5,000

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.

For me, even if I had to pay the $100/month for a few months, it’s a small price to pay for $11,000 worth of coverage. Plus I’d only be paying it if I knew I was going to need to use it. And, if I allow them to renew, I’ll just add it to the rent the next year. In fact, I build their premium into the lease and let them know that they can submit a paid Security Deposit Insurance payment receipt for a credit on their rent.

I did this research for myself. I make nothing from or 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.

Here’s info about the Maryland Eviction Process from Doorloop.