(GLOBE STREET) Apartment owner Goldcor Capital Partners has partnered with LeaseLock to roll out the company’s Zero Deposit product across its portfolio of Sunbelt state properties. Zero deposit is a lease insurance program that eliminates security deposits and deposit alternatives, like surety bonds. Goldcor plans to roll the product out across its portfolio and for new acquisitions as well.
“Like many apartment owners, we have seen an uptick in fraudulent records from new move-ins that are brought to our property management company,” Nir Goldberg, managing partner at Goldcor, tells GlobeSt.com. “While our underwriting process is appropriate, we wanted an additional way to protect against that. We have looked at other lease protection companies in the past, however, those companies didn’t yield the results that we wanted.”
When looking for an insurance company, Goldcor found mostly surety bonds. “On most other programs that we looked at, there had to be a pool that the property had to build up to cover the damages,” says Goldberg. Many times when you are paying the amounts that we looked at, it could take a number of good residents to pay for the damages of one bad tenant. This is quite different. It allows you to take advantage of a larger platform and there is no pool that needs to be built up before you can recoup damages or lost rent.
LeaseLock was an ideal partner for Goldcor because it is a true insurance program that doesn’t require a reserve to operate. “LeaseLock is a straight-forward and easy way to partner with a company that allows us to participate in an insurance pool,” Goldberg says. “This is not a bond program where you build up funds to address damages or bad debt, and the process of rolling this out to our onsite staff was easy and transparent.”
Renters under the LeaseLock program pay a $19 per month fee that will generate more than $5,000 in coverage for the property on every lease. This creates clear benefits for both the renters, who will have reduced up-front costs, and the landlords, who get real protection from damages. “We rolled it out in our portfolio, and we have already gotten a positive response from our leasing staff. Our prospects are embracing the program, and the ongoing fee has not been a deterrent to leasing and has actually been more advantageous than taking out up front deposits,” says Goldberg.
Goldberg expects future benefits as well, both in terms of occupancy and lease rates. “We would like to see closing ratios increase and occupancy increase because this is a function of tenants not having to layout large deposits up front,” he says. “Our team spends a lot of time convincing prospects into their all-in rent, and it is easier to sell this as a fee in their monthly rent.”