Security deposits exist as a way for property managers to protect their properties and ensure that renters are held accountable for any damages or unpaid rent.
However, alternatives to the traditional security deposit now provide renters and landlords more flexibility, lower costs, and a more straightforward claims process. This article will discuss the different types of security deposit alternatives on the market and why Qira’s cash management solution is the superior choice for renters and property managers.
Cash Management
Qira’s cash-backed solution is based on a deposit funds optimization concept. Qira created a model for setting up a dedicated cash account that accumulates deposits funded by Qira to protect the portfolio.
Qira’s cash-backed solution offers several advantages over traditional security deposits and other security deposit alternatives.
The first and most significant advantage for a property management portfolio is that the funds managed by Qira are treated as a pool of funds and can cover any losses to the property. In addition, the individual loss can go beyond the one-month security deposit, giving property managers more flexibility to cover damages and unpaid rent caused by renters.
Second, the claims process is much more straightforward and more transparent. If a property manager creates a claim against a renter, Qira will review the claim and, when approved, will pay the property manager directly from the cash account; there is no third-party insurance involvement in the process, which makes it very easy and quick. Qira will then work with the renter to collect the funds to replenish the cash account.
This process is much simpler and more transparent than the traditional security deposit process, which can take months to resolve and is often subject to disputes between residents and property managers.
The third advantage is the renter experience, as Qira’s approval process is instantaneous and relieves much of the financial burden caused by moving expenses.
With our security deposit alternative program, Qira built a robust escrow account infrastructure and offers, at no additional cost, a total deposit management solution. This complete solution helps property managers significantly reduce the costs involved with security deposit management.
Surety Bonds
Surety bonds are insurance policies that protect landlords and property managers against damages caused by renters. The renter pays a fee to an insurance company, which then pays any claims made by the landlord or property manager. The major drawback of surety bonds is that they can be expensive for renters, with fees ranging from 10% to 20% of the deposit amount. Additionally, surety bonds have pre-set and inflexible coverage amounts, which limit protection and the claims landlords can make.
Insurance Policies
Lease insurance policies protect property managers against delinquencies and damages. The renter pays a premium to an insurance company, which then pays any claims made by the landlord or property manager. Insurance policies can cover more than the traditional security deposit amount, but the claims process can be complicated, and renters often confuse deposit insurance with renters insurance.
Renters are often surprised that they must pay for damage despite having an insurance policy.
Billing Authorization
Billing authorization services allow property managers to withdraw a fixed amount of money from a renter’s account if they submit a charge after move-out. The amount of money is usually the same as a security deposit. Once the billing authorization is active, it will remain until after the lease expires.
The main issue with billing authorization is that renters may not know how much money they authorize property managers to withdraw. This can lead to NSFs, overdraft fees, and a general negative sentiment as the renter’s lease has ended very sourly.
Cash is King
Qira’s cash management solution is a game-changer in the multi- and single-family industry, offering unparalleled benefits for property managers and residents.
With Qira, property managers can optimize deposit funds, freeing up resources and generating more income. Meanwhile, renters can enjoy greater flexibility and peace of mind knowing that their funds are being put to good use.
If you’re looking for a security deposit alternative that genuinely delivers its promises, look no further than Qira. Learn more about Qira’s security deposit program here.
