No Security Deposit Option

[Brad Larsen]

As a SFH Property Management company, we have adopted a No Security Deposit option called our Preferred Tenant Program. We subscribe to a service called Obligo.

In this method, we use Obligo and their Billing Authorization Technology, to allow the tenants to rent from us with no up front security deposit by paying a small monthly fee.  

We expect 60 to 80 percent adoption.

Today, I am presenting this at the NARPM Broker - Owner conference.  Hopefully I get some good feedback on any improvements. 

[Jim K.]

@Brad Larsen

I've rented properties without a security deposit, and I fully intend to continue doing it. My area is full of, as @Joe Splitrock puts it, owners who like to take security deposits without legitimate grounds. There are many others who never follow PA rules and put the deposit in an escrow account in the first place. It's happened to at least three of my C/D-class tenants, and they HATE it. It steams in their guts forever.

Of course, the obvious mitigating factors of our small operation are that I'm the guy who's hardening these places before we rent them and I'm the guy fixing what goes wrong, renting from us is always a much-better-than-average deal for them, and most crucially, I deal belly-to-belly with my tenants with as few pretensions as possible. The sum of these policies is that our tenants tend to stay with us forever.

There's also one last major mitigating factor that is perhaps specific to many areas, but very much so to mine. The majority of the tenants in our properties, 80%, are in health care and have been so for longer than a decade. I am in permanent awe at how effective the US medical profession is at weeding out unreliable, dodgy, and dishonest people. The hot messes and the flakes do not last. The stakes are too high. We've done quite well piggybacking off this.