Alternatives to Security Deposits?
I recently ran across three companies that issue Surety Bonds as an alternative to security deposits. The idea is simple: instead of requiring tenants to front a hefty security deposit up front -- could be $2,500 around here -- they can essentially buy insurance and pay a small premium, one time, for a fraction of the cost.
If they default or leave damage, you (property owner) are named as insurance beneficiary and collect damages up to the amount of the security deposit. One company claims to service 1 million units (I find that unlikely).
PROS
-property owner can require a much "higher" security deposit/coverage using this system since the premium is still low for the tenant, thereby increasing your protection AND reducing their costs
-increases the pool of tenants who can afford to move into your place
CONS
-might be hard to get the surety bond to pay out for damages
-probably requires more paperwork
-unsure of how state landlord-tenant laws would react to payment; they often have a lot to say about how a landlord handles security deposits but are mum on surety bonds / insurance.
[size=18]Has anybody used these and what did you think?[/size]
-Jeff