Why high security deposits can deter renters and what to do about it
High security deposits can be a major deterrent for renters when it comes to leasing an apartment. In many cases, a high security deposit can be more than the cost of one month's rent, making it a significant expense.
While security deposits serve an important purpose in protecting property owners and managers from potential damages or missed rent, they can also discourage renters from choosing an apartment if the upfront fees are too high. In this post, we’ll discuss why high security deposits can deter renters, the impact they can have on the rental market, and deposit alternatives.
Why high security deposits deter renters.
The primary reason high security deposits can deter renters is due to financial constraints. Many renters are on a tight budget, and the cost of a high security deposit can make it difficult to afford to move into an apartment where the upfront fees are steep. In some cases, renters may have to save up for months just to be able to cover the cost of their security deposit, which can delay their move-in date.
High security deposits can also create uncertainty. Renters who have to hand over a large sum of money to their property manager might be concerned about getting their security deposit back in full, or even getting some of it back at all. This fear can be amplified if the renter has had negative experiences with this in the past. This uncertainty can make renters feel uneasy about leasing an apartment, even if it's in the perfect location and price range.
In some cases, large upfront move-in fees make it difficult for renters to plan their finances. For many, a security deposit is a significant portion of their monthly budget, and having to come up with the funds all at once, on top of other moving expenses, can be overwhelming. This uncertainty can make it difficult for renters to budget for other expenses, such as utilities, food, and transportation.
How high security deposits impact the rental market.
The impact of high security deposits on the rental market is significant. When renters are deterred from leasing an apartment due to the cost of a traditional security deposit, properties may see a decline in their number of applicants. This can lead to longer vacancy periods and a decrease in rental income. Additionally, properties that are unable to attract renters may be forced to lower their asking price or offer incentives to attract tenants, which can result in financial losses.
High security deposits can also lead to competition among properties. If one property sets a high security deposit, other property owners may feel compelled to do the same to remain competitive. This can lead to an overall increase in security deposits throughout the rental market, which can further deter potential renters.
While security deposits can provide you with a sense of security, setting them too high may have negative consequences, leading to a smaller pool of potential renters, longer vacancies, and potentially a loss in income for property owners.
Security deposit alternatives save renters money at move-in.
With a security deposit alternative like Jetty Deposit, renters save money at move-in by replacing their expensive security deposit with a low-cost deposit alternative. Just like traditional cash deposits, Jetty Deposit will cover you for lost rent, damage to your units, and unpaid fees. It also gives you the ability to tailor your coverage amounts at the property and resident level to give you the exact protection you need.
Instead of having to pay a large sum of money upfront, which can be difficult for some renters due to financial constraints, they can pay a smaller upfront fee and use the remaining money for other moving expenses, like hiring a moving company or buying new furniture. A deposit alternative also reduces the financial risk for properties. Traditional security deposits may not always cover the full cost of damages or unpaid rent, but policies like Jetty Deposit offer more comprehensive coverage.
In conclusion, high security deposits can be a major deterrent for renters when it comes to leasing an apartment. The financial constraints, uncertainty, and difficulty in budgeting can all make it difficult for renters to choose an apartment that works for them.
Properties that are looking to attract renters should consider offering lower security deposits or alternative forms of protection, like security deposit alternatives, to make their properties more appealing to renters. By doing so, you can avoid the negative impact high security deposits can have on the rental market and increase your chances of attracting high-quality tenants.