Livingston, NJ (PRWEB) September 28, 2007
The multifamily industry reported more than $900 million in losses due to vacant units, concessions, and collections, according to the 2007 Survey of Operating Income and Expenses in Rental Apartments just released by the National Apartment Association (NAA). The NAA survey was based on data as reported by owners and managers of more than 850,000 units. However, according to 2000 Census data, there are more than 17,282,000 units nationwide, which conceivably translates to industry losses exceeding $18 billion in 2006 due to vacancies, concessions and collections.
With losses comprising more than 10% of gross potential rent (GPR) last year, according to NAA's survey, property owners and managers can take proactive steps now to stem similar losses in the future, according to SureDeposit, (http://www.suredeposit.com), the nation's leading provider of security deposit alternatives.
"For far too long, the industry has chalked these losses up to the cost of doing business," said Dan Rudd, SureDeposit co-founder and CFO. "The NAA survey shows that each of the 3,465 market rent properties that comprised the NAA survey lost, on average, nearly $260,000 last year due to vacant units, concessions and losses that collections efforts were unable to recover. What community could not use this money in other ways to better serve residents or reward employees?"
SureDeposit, which pioneered the security deposit alternative industry in 2000, now offers its surety bond program to owners and managers of more than one million apartment units nationwide.
"By offering security deposit alternatives in the form of a surety bond, owners and property management firms can more aggressively market their properties and improve their risk management without having to make any monetary investment in the program. At the same time, SureDeposit's surety bond program allows residents to move in with a significantly reduced cash outlay so it's a no-lose proposition for everyone involved," Rudd added.
For example, the SureDeposit program offers owners a minimum coverage of $500, with coverage in $250 increments thereafter. For $500 worth of coverage against losses, the resident only pays $87.50 for the surety bond premium as an alternative to the traditional security deposit. To date, SureDeposit has helped renters hold onto more than $400 million that they have not had to pay in traditional cash security deposits, a real boon to the consumer who is typically faced with greater financial demands at moving time.
"As a result, owners and managers that offer this option to prospective residents have consistently been able to attract greater interest in their properties than those that do not, and because the program costs the owner nothing, owners concede nothing. SureDeposit precludes the need to offer concessions to compete for residents," Rudd explained.
"However, this powerful marketing tool also better protects the owner against losses due to damage to an apartment unit or to skipped rent, while requiring the resident to comply with the terms of the lease," he noted. "That kind of risk management power can really make a dent in the kind of losses the industry suffered last year."
SureDeposit's surety bond guarantees the protection of the property and enhances property owners' risk management, while dramatically lowering residents' move-in costs. At lease signing, the resident chooses between paying the traditional security deposit directly to the property owner or a one-time, non-refundable bond premium, which costs a fraction of the traditional security deposit, to SureDeposit. If the resident selects the SureDeposit alternative, the bond covers the lifetime of his residency. Because the program is available nationally, residents can transfer their coverage to different communities within an owner's portfolio or renew their leases without incurring additional expenses.
At move-out, if the resident meets his rental obligations and vacates the apartment in good condition, he moves out without any further obligation. If, however, any lease-covered damages, rent loss or lease violations occur, owners file a claim with SureDeposit for prompt reimbursement of the debt amount up to the coverage limit. SureDeposit's surety bond provides a level of coverage to the community against such losses or lease violations that typically exceeds that of a traditional security deposit, allowing apartment owners and managers to reduce the amount of unrecovered debt and improve their NOI.
With more than one million units in nearly 3,300 communities under agreement, SureDeposit is the nation's leading provider of alternatives to traditional security deposits. Founded in 2000, SureDeposit is headquartered in Livingston, New Jersey, and has regional offices in Arizona, California, Florida, Georgia, Indiana, Nevada, Rhode Island, and Texas.