No Security Deposit
How could No Security Deposit be better for
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).
For decades collecting a security deposit has been my modus
operandi. Before a tenant moves in you collect money equal to 1 months
the security deposit. You may try to collect 2 months but that is very
do and, I’ve found, the ones who can afford that aren’t the ones I need
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
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
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
If you have to evict in Baltimore City here is an idea of
Many landlords serve notice of Failure to Pay, which would
add however many days you give them to pay, but this is not required
Failure to Pay
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
after that (10-30)
You’ll receive a judgement usually that day, but could take
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
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
for any claims you make. So the company will go after the tenant for
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.
you need at
least 150 units
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
coverage is 3x rent and $1000 for damage
TheGuarantors.com 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
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.)
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
the policy in place while you evict. Some landlords chose the single
plan each company offers, it’s a little more involved for the tenant
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
to the rent the next year. In fact, I build their premium into the
let them know that they can submit a paid Security Deposit Insurance
receipt for a credit on their rent.
I did this research for myself. I make nothing from Leapeasy.com
Please feel free to check them
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