Security Deposits vs. Surety Bonds: The Greatest Thing You Never Heard

Ever considered not charging a security deposit?

Probably not. What if you alleviated security deposits as a strategic means of securing more prospects for your rental properties? Imagine how you could potentially blow away the competition by doing so. Sound crazy? Landlords in some areas of the country are increasingly relying on surety bonds in lieu of security deposits.

A surety bond or security bond is a guarantee from a third party company that any unpaid rent and or damages to a rental property will be covered, up to a certain amount. Some landlords mistakenly think of surety bonds as insurance, but experts explain that it is not insurance. Surety bonds are purchased by tenants and are non-refundable alternatives to security deposits, which can often be hefty lump sums.

At a fraction of the cost of security deposits, which can range from 1-3 times the monthly rent, a security bond provides the same protection (up to the amount of the bond).