How RealPage DepositIQ is Changing the Game of Security Deposits

Many a lease has been lost when the deal comes down to the cost of the security deposit. Most property managers will agree that a high deposit can discourage an applicant as much as rent cost. Suffice to say, the necessary pledge by the resident to keep the apartment fit as a fiddle, once equal to a month’s rent, is a smaller piece of the rental revenue matrix nowadays so properties can remain competitive. With rents becoming more competitive in recent months, it’s a good bet that residents will further scrutinize security deposits before signing leases. Already, deposits are not covering bases for properties when damage occurs. “Deposits have gotten to the point they don’t protect the properties anymore, they are so low,” says DepositIQ Vice President and General Manager Tom Schickel. ‘Competitive’ deposits come with a risk Generally, deposits are below $500 throughout the industry, Schickel says. But a deposit that’s a fraction of the monthly rent may hardly cover damaged wood flooring or holes in the wall. As it is now, the turnover cost of an apartment, including rent loss, is from $1,000 to $5,000, according to recent apartment industry information. Offering a “competitive” deposit is sort of a damned if you do, damned if you don’t proposition. The property may have secured the resident over a competitor with a $200-$250 deposit but is risking a big bill to put a trashed apartment back on the market. The deposit is all the property can charge back unless it wants to go through the hassle of trying to collect directly, or use the legal system to recoup additional funds owed. Then there’s the administrative headache of managing the deposits, including following jurisdictional rules on returning them—the time frame and the interest that must be paid plus any penalties for not following the rules. “You’re going through the process of collecting a deposit, putting i...