CHOOSING THE RIGHT APPROACH FOR YOUR PROPERTY
There’s no one-size-fits-all solution when it comes to deposits and risk management. The right approach depends on your market, your tenant profile, and your tolerance for risk. In tighter rental markets, reducing upfront costs like deposits can help you fill vacancies faster. In higher- risk situations, layering protection, such as combining a deposit with a guarantee product, can provide more security. The key is understanding that the traditional deposit model, on its own, often leaves gaps.
IN HIGHER-RISK SITUATIONS, LAYERING PROTECTION, SUCH AS COMBINING A DEPOSIT WITH A GUARANTEE PRODUCT, CAN PROVIDE MORE SECURITY.
STAYING COMPLIANT WHILE PROTECTING YOUR INVESTMENT As you explore different options, it’s critical to stay aligned with state and local laws. Some states require deposits to be held in separate accounts. Others mandate interest payments or strict timelines for returning funds. For example, Illinois requires landlords of larger buildings to pay interest on security deposits. Failure to follow these rules can result in penalties that outweigh the value of the deposit itself. That’s why many landlords are rethinking how much they rely on deposits in the first place.
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