When it comes to property ownership and management, staying on top of and ahead of industry trends is one of the biggest contributors to the long term success of the business. Most recently the trends are skewing towards different security deposit options for renters.
Cincinnati has just passed an ordinance that requires landlords and property managers to give future tenants different options outside of large cash deposits up front. Other states are said to be considering following suit.
“For a significant number of people living in Cincinnati, a security deposit for a two-bedroom would equal or exceed the totality of their savings,” Cincinnati Councilman P.G. Sittenfeld said in a WJS interview. “To put down $1,000 up front, that’s a significant expense for some people”.
According to the Rental Housing Journal, under the new ordinance, landlords and property managers with over 25 units are required to give incoming tenants any of the below options as an alternative to an up front cash security deposit:
- Rental security insurance, where tenants can pay as little as $3 a month. Instead of paying first month’s rent and a security deposit up front, they pay $5 a month in insurance premiums for the duration of the rental. They don’t get that money back, but the idea is making getting into the rental a possibility.
- An installment plan, where the security deposit is paid over a period of no less than six months.
- Payment of a reduced security deposit, which can be no more than the equivalent of 50 percent of the first month’s rent.
Many landlords are pushing back against this ordinance since the security deposit serves as protection for their business and assets. Insurance options leaves a lot of opportunity for property managers and landlords to be spending much more time bogged down in insurance claims.
As this type of legislation in the industry starts to pick up steam, property managers and landlords should be thinking of alternatives to security deposit options – ideally alternatives that will also support the growth of your business.
With Latchel’s 24/7 Home Assistant, residents pay a small monthly fee for a 24/7 Home Assistant to handle in home needs, like maintenance requests. The package also includes a security deposit protection plan for the tenants to ensure that they receive the maximum amount back after move out, and protection against ‘no show’ fees for when tenants need to change their schedule with vendors last minute. It’s a type of resident benefit package that many top property management companies have been utilizing for years, knowing that tenants will pay for superior service and some type of protection plan for themselves when it comes to their security deposit.
This of system also creates a new profit stream for property managers and landlords. While getting a portion of the monthly fee, the property manager will also get 3% back on all maintenance invoices. For every 100 units, the property manager can look to gain an extra $440/month in new profit. The security deposit protection portion of the resident benefit package also protects the property manager from spending time caught up in security deposit disputes.
With a system like this, residents receive a luxury living experience at an affordable cost and have confidence they’ll receive the max amount of their security deposit back with a third party audit of the return.
At the same time, property managers increase monthly profit and reduce their time on maintenance by 80% with Latchel handling all maintenance requests.
To learn more about Latchel’s 24/7 Home Assistant schedule a demo with our team below: