I have asked for opinions about Rent Guarantee Insurance, such as THIS. I was considering another idea that I thought of (take that for what it is worth).
If my rental is $1400/month, I was thinking that, instead of having the tenant pay $117/month for rental insurance that covers only 6 months of rent max, that I have them pay that to me. This would not truly be extra rent, as it would still be THEIR money, that I would only use for rent default. I would have them only pay this for a set amount of time, like 1 year. That way, I would have their security deposit PLUS another month of rent to tap if needed. If I never use it, it goes back to the tenant.
Is this idea stupid or could it work?
Honestly on something like this I would find a real estate attorney in your area and pose this question to them. Many offer a free consultation and I would pose my question to them at that time then see what you will have to do in order to assure what you propose would be legal and proper.
Until you brought it up I had never heard of Rent Guarantee Insurance. I think it sounds like a waste of money even though its not technically your money. Why not just take one or two more rental apps and find a decent tenant. At $1400/mo you have eliminated a large subset of "deadbeat tenants". Just screen your tenants. Dont complicate things.
I've never heard of Rent Guarantee insurance either, seems like a scam to be honest..when someone has excellent credit, I ask for a downpayment and first month's rent..when it's a little on the skeptical side, I ask for first and last, and security deposit. Haven't had any major issues yet..