REI INK

Single-Family

Eviction Management

Transitioning From a Default Property to a Paying Asset By Nickalene Badalamenti-Kalas The government-mandated forbearance period on default properties expires this coming June. These properties will increasingly require eviction and asset stabilization services to ready them for new tenants. What many may not be aware of is the delicacy — and absolute compliance — with which these services must be administered. A single misstep anywhere in the process, and the process will begin all over again. The current tenants remain in occupancy, incremental costs are incurred from legal and court fees, and the property continues to generate zero income. To facilitate the transition from default property to paying asset, small and mid-size investors and trusts — and their attorneys — are turning to asset management companies with the regulatory expertise, eviction and nationwide in-the-field infrastructures, to manage this process and migrate these properties to tenant-ready, income-generating assets as quickly and comprehensively as possible. THE RENTAL MARKET As more and more properties emerge from forbearance, many investors are collecting portfolios and preparing them as rental properties, either as single-family rentals, high-quality vacation homes, or for short-term rentals such as Airbnb.  Whether they decide to “fix and flip” or “buy and hold,” whoever has their new acquisition tenant-ready the soonest will see the fastest returns. EVICTION/LOCK OUT FACTORS In simplest terms, the eviction/lockout process consists of servicers like Five Brothers coordinating all activities with all stakeholders, including the investor, the attorney, the field service professionals, and local law enforcement. Amidst the eviction process, there are very specific compliance requirements mandated by the court, as well as local, county and state ordinances, and they must be followed to the letter. These regulations vary significantly from market to market, and asset management field service companies must be conversant with ordinances in each. For example, New Jersey and New York have strict mandate requirements regarding the number of field service professionals needed on site during an eviction, unless it is specifically overwritten by the sheriff. In certain markets field service professionals may be required to be licensed, such as movers or storage facilities in order to have the capability to remove debris, personal effects, furniture, and even vehicles from the property, and relocating it to storage facilities or dumps. Consistent with the specified lockout date and time, the need for an experienced eviction team to coordinate and complete lockout procedures is paramount. Another example of the need for accuracy: if the field team is even 5 minutes late, the sheriff can call off the lockout process, the property remains occupied, continues to generate no income, and the eviction process may be required to start from scratch. The need to understand and fully observe all local statutes and maintain the highest professional standards cannot be overstated. The original eviction request may be a simple lock change, but once the interior of the property is accessible by the sheriff, he or she could immediately order a complete trash-out of the property, potentially involving hundreds of cubic yards of debris. If the sheriff requests a complete trash-out and/or seasonal maintenance to mitigate blight or violations in the property’s disposition, the field team must be capable of completing that task while on site. The field team is also responsible for providing the client with progress updates throughout the eviction process. CASH FOR KEYS A pre-eviction strategy called “cash for keys” offers a cash sum for the return of the property’s keys. Utilizing this tactic can save an investor money and help avert damage to the property inflicted by the current tenants out of spite or rancor towards the investor. In certain cases, this may take the form of forgoing the security deposit if the property remains undamaged and in broom-swept condition. INSPECTIONS Once the property is unoccupied, investors have the authority to begin rehabilitation to get these assets into tenant-ready condition. This begins with an inspection that thoroughly documents — with geo- and time-stamped photographs — the condition of the home and all work needed to prepare the property for the next tenant. These photos also help validate that the products and services ordered by the investor are those being utilized in the rehab. Geo- and time-stamping are becoming industry norms, and many funding partners are beginning to require them for fund disbursements. ASSET STABILIZATION For portfolio properties that are unoccupied, engaging in-the-field asset stabilization activities to ensure the property is in immediately-rentable condition is important. These activities may include minor rehabilitation work, yard cleanup, pool openings and closings, gutter clearing and lawn care. In colder climates, winterization may be necessary, ranging from heating and plumbing fixture maintenance to insulation work. BEST-IN-CLASS DISASTER TECHNOLOGY Five Brothers utilizes proprietary asset stabilization disaster technology called CLADE, an advanced mapping system designed to help investors monitor property status in the advent of natural disasters or severe weather events. CLADE leverages geospatial technology to help determine the likelihood of damage to properties potentially in a storm path, and to allow proactive measures to reduce or prevent damage. If damage is inevitable, CLADE technology helps investors determine which properties in their portfolio have likely been impacted, and generates a report sent directly to the investor. They can then order FEMA inspections, hazard claims repair bids, as well as remediation and restoration work. SERVICE FLEXIBILITY The need for fluency in the eviction, inspection and asset stabilization process is essential. For investors without a dedicated asset stabilization team, Five Brothers can seamlessly function as the in-house field service company, providing all the elements required to remain in-the-know with compliance changes as they occur, and ensuring that property requirements are met quickly, completely, and compliantly and returning the property to tenant-ready status.

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Small MarketS

Single Family Homes vs Multi-Family Homes By Scott Sklare As an investor, real estate broker, advisor, and owner of a property management and rehab company, I am often asked, what I prefer: Single Family Homes (SFH) or Multi-Family Homes (MFH). My honest answer is “it depends!” I happen to prefer SFH, but I invest, own, and manage both types. In reality, there is no right or wrong answer. Most everyone knows something about houses. Most everyone has an opinion about what prices are doing – or tell you about a good deal they or someone else got on purchasing their personal residence. Amazingly, only a tiny percentage of the population invests in houses. Most recently, the large investment houses have started buying single-family homes in select markets and that should tell you something. This article is about the benefits of investing in SFH in a relatively small market. I reside in south-central Wisconsin, and the specific Metropolitan Statistical Area (MSA) that I am going to use as an example is Janesville-Beloit, Wisconsin. Relative to my earlier comment regarding large investment houses – a market like Janesville-Beloit is somewhat “under the radar.” Very few large investors have heard of it, or paid attention to it, and that is a good thing. Why Single-Family Houses are a Great Investment After 40 years of real estate investing, I much prefer houses vs apartments. I believe that houses make more money with less work than other real estate investment types. That is probably contrary to most gurus’ opinions. I own and manage both. The tenants in apartments come and go more often – higher turnover. Most every time a tenant moves, the unit requires more work on my part to get it “rent ready” for the next tenant. Tenants in apartments tend to be more demanding. I get more complaints about the neighbors, such as, “my neighbor is smoking cigarettes, my neighbor is smoking marijuana, my neighbor is loud, noisy, messy…” House tenants are significantly different. I find that house tenants treat the house as if it were their own. In all likelihood, it is a family that is on a quest to buy their own home and is grateful to be living in their “own/rented” home. As a result, house tenants stay longer — on an average of three to five years. That is important to note — a long-term tenant reduces your maintenance and vacancy expenses. I do not have to repaint, clean, or replace flooring until they leave. If you happen to be an investor and a licensed real estate agent/broker — that tenant may turn into a buyer for you someday. If you treat them right, they will hire you to be their buyer agent, providing an additional, built-in stream of income. Another reason I prefer SFH is that houses maintain their value whether they are occupied or not. Apartment building value is predominantly determined by the amount of income it produces. Houses are more liquid. You can buy a house with a smaller down payment. There are many more buyers for houses than for bigger properties. You have both investors and families looking for their personal residence. Apartment vacancies are typically 10% whereas house vacancies rarely exceed 5%. Analyzing the Small Market Demographics Prior to investing in any given geographical area, town, or city, it is in your best interest to look at some key factors; geography, demographics, education, industry, largest employers, households, business conditions, employment/unemployment rates, and so forth. In a nutshell, you want a stable economy and a stable workforce with a variety of industries that will represent a good and healthy rental market. First a little bit about the MSA. Janesville-Beloit is just about a straight shot, 45-60 miles south of the state capital, Madison, Wisconsin (state capital and home of the University of Wisconsin). Here is some basic demographic information: Median Age » 40 Ethnicity » Caucasian — 80%, African American — 10%, Hispanic — 10% Education (Post-secondary) » 55% Household size » 2.6 Median Home Value » $147,000 (35% within $90,000-$130,000) Median Household Income » $59,000 (50% earn between $35,000-$100,000) Estimated net worth » $129K Renters vs Owners » 35% renters, 65% owner-occupied Employed population » 50,583 Unemployment rate » 3.8% Households » 42,333 # of businesses » 3,360 Economic Development Activity Economic development activity is an important consideration when investing. Most recently Amazon, Staples, and Dollar General built 3,000,000 square feet of warehouse space and created over 1,500 new full-time jobs. The jobs represent industry-leading pay and comprehensive benefits packages. Capital investment exceeded $200 million dollars. There is a sizable segment of the population that rents and has a household income of $59,000. Again, at a high level, that means that a large portion of the population will qualify for a monthly rental rate of $1,200 to $1,500. A Real-Life Example – The Return On Investment Let’s conclude with an example of buying a Single-Family Home, Long Term Rental in a small market, specifically, the Janesville-Beloit Wisconsin market. Property Information » 3 bedrooms » 1 bath » 6 total rooms » 1.5 stories » 1100 finished sq ft » .13-acre lot size (roughly 40×120) » Centralized location » Forced air furnace » Municipal water/sewer » Fresh paint » New flooring » New counters, new sinks » Open floor plan » Property Taxes — $764 Year 1 Analysis Purchase         $89,900 Closing $1,000 Repair $0 Total    $90,900 Down Payment           $17,980 Loan Amount   $71,920 Amortization   30 years Interest rate    4% Monthly P&I    $345 Annual Income            $14,414 Annual Expenses         $9,005 Annual Cash Flow        $5,410 Cash on Cash ROI        28.5% Equity  $19,696 Annualized Return      32% Prior to making an investment decision, real estate investors have many factors to consider regarding asset type, market size, financing options, etc. By carefully conducting “Real Estate 101” due-diligence and collaborating with a local advisor who is knowledgeable about the local area and market, the investor can minimize risk and achieve returns that surpass other investment opportunities.

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Choosing the Right Title Company

Title Clearing is An Often-Overlooked Area for Risk Mitigation By Dax Junker Risk and reward have always been intrinsically bound together across investment types – including real estate. The more risk an investor is willing to take on an investment, in general, the higher the potential rate of return and reward. Over the last 15 years, with interest rates stable or declining, the real estate market has, overall, been appealing on many different fronts. But the last 12 months have seen a sharp reverse of that trend and a sizable jump in rates. Add in exponential increases in home values, rising inflation, supply chain disruption and labor shortages, and a new work environment brought about by the pandemic, and suddenly real estate investing looks different. But a smart investor knows that volatile and dynamic markets often bring the best opportunity if you know where to look. A smart real estate investor also knows it is important to find partners to work with that can help reduce their risk in a myriad of small ways that all add up to larger returns. Title clearing is an often-overlooked area for risk mitigation. Finding Opportunity in SFR The world changed dramatically when the COVID-19 pandemic hit because people were forced to spend more time indoors, often living and working in the same space. That dynamic caused many people to begin looking for more space. For many people, more space does not equate to buying when you add up rising interest rates, a 20% down payment on a $300,000 median house price, and the cost of maintenance and repairs associated with long-term home ownership. In that context, Single Family Rentals begin to make a lot of sense for more families. SFR tenants obtain the feeling of being in a home, they tend to stay in one place longer and take better care of their residence because they treat it like a home, not a temporary stop. Many real estate investors saw that trend and are finding opportunity in single family rentals. With single family home prices rising, families are having to rent instead of buy and investors are buying into the SFR market in a big way. In fact, according to Forbes, almost 20% of single-family homes sold in 3Q21 were sold to investors. The John Burns Real Estate Consulting firm has even reported recently that investors accounted for 33% of all home sales in January, 2022. When rates began rising in 3Q last year, it was broadly recognized that the refinance boom was over and title companies needed to shift their focus. With the investor market taking off, that appeared to be a good direction. While working with investors has some minor challenges, there are also some big benefits – for both the investor and the title company. For a title company, one of the biggest benefits of working with investors is that most of them with any experience at all know the business and the process really well. They also understand that title search and clearing, done right, inherently reduces risk, can eliminate a lot of problems down the road, and makes closing a lot easier for everyone involved. What Investors Should Look for in a Title Company For investors, it is important that your title company have team members that are regionally or state focused. Title laws change from state to state and a national company with local knowledge can actually help an investor grow their business rather than force them to work with a different company for different geographic locations. That can add confusion and cause errors, costing an investor time and money. An investor should also make sure that their title company works with national underwriters for two major reasons. First, a title company should offer their clients the best option for them, and that level of variety means you can cover many different types of deals in many different environments, again — to the benefit of your investors. Second, that geographic variety helps find underwriters that may also be local experts in areas with specific issues they are more familiar with, helping to reduce risk on particular types, or locations, of investment. Last, but not least, any strong title company should have the technological tools that integrate across vendor platforms to deliver fast, accurate information as soon as possible. There are smaller title companies that have not made the investment in technology that they need to and not having the right tools can actually add risk to the process rather than reduce it. In an era where people do not seem to disconnect from their phones and email, it might seem odd to mention communication with investors as a challenge — but it truly can be and getting communication right is key for title clearing. Some investors might be working 20, 30 — up to 75 or 80 deals — at a time and they need answers right away. Ensuring that an investor gets the information they need, when they need it, is so mission critical that we are building out a dedicated call center so that we can be that much more responsive to investors’ needs. We do not ever want to hear that one of our clients lost a deal because we did not get back to them in time. Finally, some title firms work on a volume basis – so the bigger the volume, the higher you climb on the processing list and a smaller investor’s transactions get bumped down the list. That type of volume focus actually punishes investors that might do a lot of deals over a period of time, not just all at once. It also eliminates the possibility of relationship building where working with the same people allows your firm to get an understanding of the personalities involved, develop a preferred workflow, and deliver quality results. So before choosing a title company to work with, do some research and ask them how much experience they have, if they can execute

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Homebuyers Speak Out

There’s a Lot to be Learned from Homebuyer Behaviors By Miriam Moore The dramatic real estate landscape of the past two years has given lenders, servicers and investors the opportunity to see just how directly market conditions can shape homebuyer behaviors and influence their perspectives. And while the surge in buying and refinancing activity came as no surprise to anyone given the extraordinarily low interest rates, it is worth looking more deeply to see some of the less obvious implications of how buyers responded to market challenges and opportunities. In January 2022, ServiceLink set out to do just that by partnering with Schlesinger Group to survey 1,000 homeowners who had purchased a home within the past five years. The 2022 ServiceLink State of Homebuying Report (SOHBR) provides year-over-year data that reflect generational trends among recent homebuyers, attitudes toward alternative paths to homeownership and the role of technology throughout the process. Navigating Opportunities and Challenges As record-low interest rates met record-high home prices in 2021, homebuyers had some tough decisions to make. Some dove into the real estate market headfirst, believing they might never see rates like that again. Plenty of others thought about buying but backed out. More specifically, 24% of the homeowners surveyed for the 2022 SOHBR said they considered buying a home but ultimately decided against it. High home prices (44%) and low housing inventory (28%) were among the top factors that held them back. That’s quite different from sentiments shared in early 2021, prior to the historic increases in home prices, when only 31% cited high home prices and only 8% low inventory. The primary reason homebuyers said they had deferred in 2020 was that they decided to upgrade their current homes instead (34%). Year-to-year differences are apparent in the refinance space as well. The majority, 62%, of 2022 SOHBR respondents who refinanced said they did so primarily to secure a better mortgage rate, while only 44% of 2021 SOHBR respondents who refinanced cited the mortgage rate. Instead, more than half (55%) of refinance decisions made were related to borrowers’ desires to make home improvements (only a quarter cited home improvements as a reason for refinancing in 2022’s SOHBR). In total, 30% of 2021 SOHBR respondents told ServiceLink they refinanced their current home, and 25% in 2022. Some respondents are leaving the door open to the possibility of refinancing in 2022 (23% say they are likely to refinance). When selecting a provider for refinancing, respondents stated they are looking for the following factors: the ability to close quickly (41%), ability to complete most or all of the refinance process digitally (34%), ability to complete the application digitally (33%), positive online reviews (31%), in-person customer service (27%) and recommendations from friends or family (27%). Leaning into Mortgage Technology The pandemic helped accelerate adoption of digital mortgage solutions by lenders, servicers and borrowers. Homeowners have expressed their desire to keep that momentum going. More than two-thirds of them (69%) said they used technology to research property listings; they also leveraged technology to take virtual property tours (37%), electronically sign documents (36%), digitally review closing documents (34%) and more. While the use of technology in these applications has been steadily trending upward over the past several years, the use of eSigning and digital document review spiked last year, as more lenders adopted the technology to support people sheltering in place or limiting their in-person interactions. In ServiceLink’s 2021 SOHBR, 10% of homebuyers said they had eSigned documents and 13% digitally reviewed documents prior to closing; those percentages rose to 36% and 34%, respectively, in the 2022 study. It is likely that these and other technology solutions will continue to grow in use as they facilitate a smoother homebuying process. Homebuyers across generations and gender say they especially appreciate the convenience/ease of use (72%) and time savings (60%) real estate technology offers. Embracing the Influence of Millennials and Gen Z The youngest subset of buyers, Gen Z/millennials (ages 18-40), continue to be a driving force in the housing market: 36% of them bought a home in 2020 or 2021, and 26% say they are likely to purchase a new home in 2022. Additionally, 32% plan to refinance this year. Looking into their motivations for buying their current home, 42% said they were upsizing from their current home, 21% were taking advantage of attractive interest rates, 17% needed more space to work remotely and 14% bought it as an investment property, among other factors. What truly sets this group of buyers apart from older generations, however, is their openness to new ideas — 23% would purchase a home without seeing it in person first, for example, and 55% either have, or would be willing, to buy a home at auction. This willingness to buy at auction also came to light as part of another ServiceLink study in late 2021, when 75% of millennials (ages 25-40) surveyed said they would consider buying a home at auction. They and others who said they would consider buying at auction were motivated by potential cost savings and a faster homebuying process. Fulfilling Homebuyers’ Needs for Education In addition, homebuyers would likely appreciate specific education about their homebuying options. For example, 30% of respondents are not sure if they would be willing to buy at auction because they do not know enough about the process. They want information that will put them on equal footing with savvier buyers who understand all of their options. Envisioning the Path Forward The results of the 2022 SOHBR confirm that homebuyers are strategic in their decision-making process, taking market conditions as well as their own financial standing into account before moving to purchase or refinance a home. Lenders and servicers who understand their thinking and support their needs are in better position to earn their trust and business in 2022 and beyond. To view the complete 2022 State of Homebuying Report, visit: svclnk.com/state-of-homebuying-report-2022

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Corporate Housing

Corporate Housing is Essential to Welcome New Businesses and Residents By Angela Healy The spring housing market tends to be the real estate industry’s peak season, and this year looks to be no different. In an already booming market, the ongoing increase in consumer behavior patterns such as relocation, remote work, and inventory availability add even more impact. Key consumer trends driving the real estate market will continue to do so and have led to a demand in corporate housing, making it a great time to invest in this growing industry. Specifically, investing in single family homes presents a prime opportunity to capitalize on the increase in demand for corporate housing as Americans move to smaller and more affordable markets. Real Estate Market Drives Up Corporate Housing Demand  Last year, home prices soared nearly 20% and 70% of homes were in bidding wars. The wide acceptance of remote work has allowed Americans to sell their homes in some of the country’s most expensive cities and move to up-and-coming ones, such as Nashville, Charlotte and Salt Lake City, giving them a bigger budget than locals. In some of the hottest markets, transplants have up to 30% more to spend on homes than local buyers. This trend gives insight into ever increasing home prices, but also further high-lights the mounting pressure on some of the country’s most competitive cities for housing availability – particularly single-family homes. Inventory is significantly lower now in comparison to recent years. Among over 300 housing markets across the country analyzed by Zillow, 254 of them have inventory levels that are down by more than 30%. That being said, a record one-third of Americans are still looking to relocate. Many, especially families, are moving to smaller markets where they can have more opportunities, lower cost of living, and escape high urban areas as mortgage rates and increasing rent prices make affordable metros more attractive than ever. As a result, the demand for corporate housing, especially fully-furnished, single-family residences, is on the rise without signs of slowing down. Many Americans are choosing to sell their homes and move into rentals to ensure they can make non-contingent offers on new properties and utilize corporate housing as an interim stay until finding their permanent home. Given the limited inventory numbers, buyers are needing to wait longer to find their ideal buy, so a corporate housing option becomes that much more valuable. In today’s real estate environment where housing inventory remains at record lows and prices continuously surge, temporary housing is critical for city growth. Behind the Trend Individuals and families are not the only ones making a move. Businesses relocating to smaller-sized cities are scooping up corporate rentals for transitioning executives and employees, and families conducting full home remodels are leveraging these temporary stays as well. It is also projected that traditional, unfurnished rental housing will see vacancy rates go up as rental prices rise. If demand amongst tenants is to decrease, landlords and property managers may take advantage of the opportunity to get into the corporate housing market. In addition to remote work and individuals moving by choice, business office relocations are also proving to be a key driving factor in demand for corporate housing for single family homes. When a company seeks out a corporate relocation to a new city or is ready to expand to a new geographic location, there are several critical factors that are essential for consideration, whether moving within the current state or to another region of the country. Employee retention and recruitment is one of those important considerations. Companies are recognizing the long-term importance of remote work for retaining their workforce and the shift in preferences for employees to live and work closer to their homes and families. Additionally, factors such as quality of life, cost of living, and education opportunities are increasingly carrying significant weight as part of businesses’ decisions on where to locate their operations. As a result, smaller and medium sized cities are positioned for ongoing growth and economic development. However, to truly realize the benefits of these transformational business shifts, economic planners must recognize the importance of supporting relocating employees in the process. Corporate housing has proven to be a key component of the equation. Investing in Single-Family, Corporate Housing In addition to corporate relocation housing needs, this model is an attractive and needed option for families and individuals in a range of situations such as traveling for medical reasons, those on government or military assignments, or those moving to a new area before securing long term housing. Single family, fully-furnished properties are essential to enable urban growth and should not be overlooked by investors looking to capitalize on the demand for corporate housing. Corporate housing is significantly different from short-term housing, and essential for cities poised to welcome new businesses and residents following the COVID-19 pandemic. According to data from the Corporate Housing Providers Association’s (CHPA) Annual Report, both the international and U.S. corporate housing markets experienced significant increases in demand and revenue during Q3 and Q4 2021, with the U.S. market in particular skyrocketing and representing a large part of revenue during those quarters. Additionally, the vast majority of residences that make up the current industry and are most in demand are one and two-bedroom residences. The corporate housing market segment continues to grow year after year, even outpacing the hotel market and traditional short-term residences. It is evident that there is a significant opportunity for investors to get involved with an industry that is well positioned for significant growth along with the already red-hot real estate market, especially as businesses keep accepting remote work and Americans continue to relocate for various reasons. The ongoing growth of the corporate housing industry and the importance of maintaining this inventory in smaller cities and growing markets to welcome population growth make investing in single family homes in particular an optimal way to capitalize on investing in the corporate housing industry.

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Increase Value of your SFR Portfolio with Rent Protection Insurance

Improve Your Bottom Line by Offloading Risk by Adam Meshekow Every real estate investor can recall with great clarity and detail a time when a defaulting tenant caused thousands of dollars in damage to an apartment or home rental. While infrequent occurrences, when they do happen, they can ruin an otherwise strong annual financial performance. In a year of unprecedented rent default and massive unemployment, missed rents and bad debt have reduced portfolio returns and humbled investors and operators alike. Furthermore, Rent Reform continues to gain traction across the country, with many sponsored bills coming to statehouse floors in the coming months. The CDC eviction moratorium—an extreme example of rent reform—may wind up costing owner/operators billions of dollars in lost rent. In the midst of all of this adversity, new and innovative rent protection products are helping to deliver economic value and true risk transfer to the SFR industry. Let us start with security deposits, which have been used for generations to limit the amount of risk that a landlord takes when renting out an asset. In most jurisdictions, landlords are required to follow strict rules and regulations governing how large of a deposit they can demand, how to hold cash deposits, and for what they can be used. The process of administering, accounting for, and returning security deposits represents a cost center for landlords across the country, costing $35-$60 per door per year to manage. Landlords have been self-insuring bad debt through the use of cash deposits for generations. This form of self-insurance is useful to cover a small loss or minimal damage to the asset, but fails to cover most losses resulting from skips and evictions, such as rent, utilities, late fees, legal fees, etc. Much of the innovation in rent protection and security deposit replacement insurance is being driven by rent reform. New rent reform legislation limiting the amount of cash deposits and requiring landlords to offer insurance alternatives has passed or will pass in cities such as Atlanta, Cincinnati, Baltimore, and New York. The good news: these new products truly are a win-win for both the operator and the resident. Residents are feeling the pinch from COVID-related loss of employment and reductions in income. Liquidity is at a premium today and residents are loath to fork over one month’s rent to a landlord and have it sit in the bank. Cash security deposits are a highly inefficient use of capital and a poor form of self-insurance when compared to these novel soft-capital products. Security deposit replacement insurance products allow landlords to enjoy as much and often more coverage than what a traditional cash deposit provides and allows the consumer to finance the cost over time by paying a low monthly fee. For example, let’s say the rent on a single-family rental in Florida is $1,800 per month and the landlord wants a $2,500 security deposit to cover damage, utilities, rent, and legal fees. In lieu of cash up front, the resident could pay roughly $25 a month in insurance premiums. Allowing the resident to pay overtime at a rate of approximately 1% of the cash security deposit per month is a true win/win for both the owner/operator and the resident. It gives the resident flexibility to move in without having to come up with all of the cash required, it saves the owner-operator around $50 per door in security deposit administration, and it allows the owner to have almost 50% more coverage in the event of missed rents and fees and damage. When applied across all properties, security deposit replacement insurance improves portfolio value by increasing occupancy, reducing vacancy loss, and improving overall NOI. Owners/Operators across the country are embracing this type of insurance technology across multifamily, student housing, and single-family rentals to boost NOI as much as $900,000 per every 1,000 doors. There are not many products out there that can have this type of impact on your bottom line by offloading the risk to someone else so you can focus on growing the value and operations of your assets.

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