The problem with surety bonds is that they are not renter friendly and there is a pool of money that gets quickly depleted when you go to make a claim for a simple turn-cost. On top of depleting the pool and potentially exhausting it completely, the pay-outs are between 30-45 days, so you're left covering the cost until the funds arrive (if they ever do, depending on if the pool has enough money in it). They will also go after the resident to recoup the money there was a claim for, which will lead to negative reviews.

My suggestion: evaluate a true insurance solution like LeaseLock. The resident pays a low monthly fee starting at $19/mo and your units get up to 6x rent protection, excessive damage protection, and they send an automatic $100-200 turn-cost payout within 48 hrs of regaining possession of the unit. This is not a claim the resident is not liable for turn-cost. You're also able to bundle $100k liability insurance through LeaseLock.

Feel free to reach out to me directly if you have any questions.

We actually covered Surety Bonds in our most recent Screening Research Report! You all can download it here: www.multifamilyinsiders.com/apartment-fo...ning-research-report

It really depends on your property. I worked with bonds at a smaller tax credit site. Residents loved the lower up front cost, but rarely understood that it was insurance for us, not for them. They would move out thinking the bond covered the damages rather than thinking they had to pay them. (There was no way of explaining that they still remembered by move out). The funds pool dipped very rapidly, especially with evictions. The company would reimburse the bond amount, then forward that amount to collections under their name and any excess of the bond amount under ours. Only our deal with collections was better than theirs so a larger portion was deducted on their accounts that got paid (and went back into the funds pool). It is not worth the hassle unless it’s a larger property where there aren’t many damages.

I've successfully utilized these programs.

The goal of property management is to collect rent. So ask yourself the question -- What is the fastest, quickest and safest way to get residents into apartments and paying rent...!!!

Simple and short, your are outsourcing the security deposit process. The bond companies are great mathematicians to explain the economic impact, which looks good - but you are paying for this service.

Choose a partner that is either integrated or has a sure fire way to not complicate your leasing process. I don't like confusing the residents with pay me for rent pay someone else for something else, etc... Keep in mind most residents do not understand the business -- make it as simple as possible -- get them into the apartment and paying rent quickly...

Ask the company what happens 1. When your management company changes 2. What happens when your claims exceed what was paid in?

I'm with BetterNOI, and here are a few answers to your questions, Michael:
2. Residents benefit from paying less cash out of pocket at move-in (a point in time where they are already experiencing a lot of additional expense)
3. Residents remain liable for 100% of damage or unpaid rent; a surety bond does NOT remove them from their obligations per the lease. If a property has a bond pool, they are able to withdraw damages/unpaid rent from the bond pool up to the amount of the bond, however the resident still remains liable.
4. Our company automatically initiates collections on behalf of our clients, and the collections "split" is determined by their collection agreement. The amount collected on behalf of the client is deposited BACK into the client's bond pool, essentially "replenishing" the pool.

Over time, clients are able to manage the amounts in their bond pool, potentially withdrawing funds for other uses when their bond pool amount exceeds their projected needs.