Press Coverage

There can be no doubt what type of renter the Ellington, a new apartment building in Washington, D.C. is trying to attract. The complex features a billiards room and fitness center, and residents can socialize by watching sporting events in the building's media room.

The building's Web site touts “The Lure of the U,” the “U” referring to the street address of the Ellington. On the U, the Web site boasts, residents can head to nearby coffee shops, restaurants and theaters, and hear the pulsing beats of hip hop and jazz from bars.

Of course, none of the residents pictured on the Web site look older than 30. Donatelli & Klein, the developer of the Ellington, built the complex to cater to the age group known as Generation Y, loosely defined as children born between 1977 and 2000, the oldest of whom are now in their late 20s. The Ellington is hardly alone in trying to reach the Gen-Y crowd. More building owners are focusing on young people and designing units to their tastes.

“We are seeing more developers aiming at young people by offering billiard rooms and other amenities,” says Michael Cohen, senior real estate economist with Boston-based Property & Portfolio Research. “As the number of young people increases, we will likely see more efforts to reach them.”

Simple demographics explain the growing appeal of the young market. Of the nation's 110 million households, only 19 million are currently headed by people aged 25 to 34, the prime group of apartment renters. But during the next decade (from now through 2015) the number of young households is expected to rise sharply, climbing an average of 290,000 annually, according to Celia Chen, director of housing economics for Economy.com, a consultant in West Chester, Penn.

Gen Y, the children of the Baby Boomers, should bring welcome relief to apartment owners, says Doug Bibby, president of the National Multi Housing Council (NMHC), a trade group based in Washington, D.C. The industry has been feeling the impact of the so-called Baby Bust, which started after 1964 and resulted in a declining number of young households from 1995 to 2004.

Rent incentives for Gen Y

To catch the eye of Gen Y, developers are building units with moderate rents. While some young lawyers and accountants can afford a life of luxury, most recent graduates have limited budgets. The Ellington has kept costs down by offering some apartments with small floor plans, including 580 sq. ft. studios. Another cost-saving technique is to eliminate features that young people don't value such as phone jacks.

In a building that targets young renters at 320 East 22nd Street in Manhattan, Mann Realty Associates does not pay to install phone jacks. Most of the young tenants arrive with their own cell phones anyway and have no use for telephone land lines. Mann Realty's building also does not offer a Manhattan staple, the doorman. Providing 24-hour staffing would raise rents by 7%, says Maurice Mann, CEO of Mann Realty.

To hold down a tenant's initial expenses, some buildings are turning to companies that help reduce the cost of security deposits. The niche is dominated by Livingston, N.J.-based SureDeposit, a company that is now facing competition from SecureALease in Chicago.

Under the traditional system, a tenant with a monthly rent of $1,000 has to pay a security deposit of the same amount. The security deposit is returned to the tenant when he vacates the apartment, provided there are no damages. But that cash outlay can be a formidable cost for a young person who also faces moving expenses and the price of furnishing a first apartment.

With SureDeposit, a new tenant provides no security deposit. Instead, a tenant pays a 17.5% nonrefundable premium, or $175 for a $1,000 apartment. If the tenant causes damage, SureDeposit covers the losses and chases the deadbeat to cover the cost of repairs.

No tenant is required to use SureDeposit, but in projects where the feature is offered, more than 80% of residents choose this option. “This really helps young people move into quality apartments at a time in their lives when they don't have much to spend,” says Paul Kaliades, president of SureDeposit.

Some apartment owners feature SureDeposit prominently in their marketing campaigns, advertising that tenants need not worry about hefty deposits. In markets with higher vacancy rates, such as Houston and Atlanta, some landlords have lowered security deposits as an inducement. In a typical promotion, apartment companies advertise $99 security deposits for apartments with monthly rents starting at $500.

Amenities for computer geeks

While young renters may have limited budgets, they are sophisticated consumers of technology. To appeal to this computer-savvy generation, many landlords are providing high-speed Internet connections. The Shoreham, a new building in downtown Chicago developed by NNP Residential & Development, offers Wi-Fi — wireless connections to the Internet — in its swimming pool area. Installing the system cost the developer $15,000, but it enables residents to use their wireless laptops while lounging by the water.

Young renters are shopping for their apartments on the Internet, and once they sign a lease, many tenants prefer to pay electronically. To meet these expectations, landlords are being pressured to offer services such as rent payment via the Internet.

And apartment companies are finding renters through the Internet. Mann Realty finds many leads through craigslist.org, a popular free Internet site where consumers can search for a variety of offerings in addition to apartments. “We get e-mails from Europe and Japan every week,” says Mann. “Students and young professionals are geared to using the Internet.”

Besides providing appropriate technology, some developers carefully design their projects to suit the particular tastes of Generation Y. The Ellington in Washington, D.C. has a media room where tenants can socialize by watching sporting events on wide-screen TVs.

The building provides a free fitness center, enabling residents to avoid the expense of joining a health club, which can cost $80 per month. There is a business center with computers and printers, and tenants who work at home appreciate the conference center. “People don't like to meet clients in their apartments,” says Maurice Walters, the Ellington's architect.

For hip, young residents who work downtown and don't own cars, the Ellington is ideal. Located at the corner of U and 13th Street, the 200,000 sq. ft. building is about two miles from the White House and built right above a Metro station. If a resident wants to take a drive, he can reserve a rental car on the Internet and pick up one of the vehicles parked in the basement of the building.

Eager to reach people ages 24 to 32, ParkCrest at Innisbrook, an apartment complex in Palm Harbor, Fla., conducts joint marketing campaigns with a nearby golf course. To suit the tastes of tenants, the apartment complex makes sure that each unit includes at least one large, bare wall. That is a change from the past when developers sought to add extra shelving. “Everyone seems to have a big TV or entertainment unit,” says Virginia Love, training and marketing manager for New York-based ING Clarion Realty Service, which owns 5,000 residential units, including ParkCrest.

“You can't break up the wall with bookcases,” Love says. “And if there is a fireplace, there had better be another big blank wall where they can put their TV.” Love notes that projects have long offered health clubs and common rooms. But these days, developers also are building media centers and cyber cafes.

Trendy design sells

Gen-Y renters tend to seek apartments that include hip design features. At the Ellington, apartment units have concrete floors that are stained to simulate the look of a loft. Modern track lighting contributes to the effect. The Shoreham in Chicago spent $30,000 on a billiards room and café.

But does the focus on young tenants drive away the older crowd? Not necessarily, says Robin Loewenberg Berger, executive vice president of NNP Residential & Development. While many of the apartment complex's tenants are under 40, there are also some older renters who appreciate amenities such as the steam room and business center.

As always, location is important to tenants. And more and more, young people want to be in active urban centers. The Shoreham is near the heart of Chicago's downtown Loop. The Ellington in Washington, D.C., even has a restaurant located on its ground floor.

“Young people are returning to the cities, and that is encouraging apartment development in many parts of Washington,” says Chris Donatelli, president of Donatelli & Klein.

For young people, the move back to cities represents a big change from the tendency of their parents, who preferred the suburbs, says Youguo Liang, managing director of research at Prudential Real Estate Investment in Parsippany, N.J. “My theory has always been that children do the opposite of their parents,” says Liang, a member of the Baby Boom generation. “We fled the city for better air and education facilities, so our children grew up in the suburbs. Now they are tired of feeling isolated, and they are moving back to the cities where it is easier to see friends and find dates.”

Gen Y's long-term impact

The growing number of young city dwellers may already be helping to lower vacancy rates, says Cohen. According to Property Portfolio & Research, the first-quarter vacancy rate registered 7%, down from 7.4% at the end of 2003. While the favorable demographic trend may be boosting the apartment industry, job growth and limited apartment supply also are helping to reduce vacancies, Cohen says. In the past year, 60,000 apartment units have been converted to condos, which removes units from the rental market and helps to limit the supply, he says.

Cohen forecasts that vacancy rates will dip below 6% by 2009 due in part to the increasing demand from Gen Y. “We should see a gradual and continuous decline in vacancies for the next five years,” he says.

Some industry executives believe that the strong demand can last for a decade or more. Besides the growing number of young tenants, the country is attracting an increasing number of immigrants, who are traditionally long-term renters. These powerful trends should prop up apartment markets for the next 15 years, especially for developers who understand how to cater to the customers, according to Bibby of the NMHC. “For the first time in awhile, the apartment industry will enjoy a huge tailwind.”

Stan Luxenberg is a New York-based writer

http://www.nreionline.com/mag/real_estate_apartments_tailormade_generation/

6/1/2005 Units
Amenities Residents Will Literally Pay For
BY LISA TROSIEN

Say the word “amenities” to any apartment professional and most of them will envision the same thing: pools, weight rooms, business centers and more. Some might think along the lines of services they provide their residents, such as plant watering, picking up mail, valet dry cleaning and pet sitting.

But for the more progressive-minded companies, there is an entirely new way of thinking about amenities. These companies are rethinking the way business has been done in the past, from security deposits to acceptance of rental payments. And it’s catching on quickly with residents and prospects across the country.

Credit Card Payments

In a survey performed in November 2003 by AB Research Associates Inc., an independent research firm in Danbury, Conn., 89 percent of residents who were allowed to pay their rent with their American Express card declared that this new amenity was more valuable to them than a fitness center, pool or business center. Even among non-users of the card, 49 percent ranked the ability to use their American Express card higher than the business center or the pool at their community. Amazingly, 59 percent of residents enrolled in the American Express rent payment program indicated that the program would influence their decision to renew at their community.

American Express takes its program even further by co-branding its marketing initiatives with their multifamily housing clients.

Alternatives for rental payments are offered by PropertyBridge, an Oakland, Calif.-based payment services provider, who recently announced a strategic alliance with Visa USA to market its data-driven, online rent-payment service for residential properties.

Currently, 53 million households bank online. By 2008, business intelligence firm Jupiter Research projects that the number of U.S. households banking online will reach 56 million, with 85 percent of those households paying their bills online.

Security Deposits

Another amenity in the market today is the security deposit alternative, which allows residents to reduce their move-in costs.

How does this work? For $500 worth of coverage, the resident pays an $87.50 security deposit alternative premium at move-in. The one-time, non-refundable premium is paid by the renter at lease signing and remains in effect for as long as the renter resides at the leased apartment. In addition, the bond continues to provide coverage at no additional cost if the renter moves to another apartment within the owner’s portfolio.

“Renters are drawn to properties that offer security deposit alternatives because they reduce their move-in costs and free up cash when they need it most,” said Paul Kaliades, President of SureDeposit, a provider of security deposit alternatives to the apartment industry. “Owners and managers benefit too because the surety assumes responsibility for processing all collection and recovery activity, reducing or, in some cases, eliminating the administrative burden typically associated with traditional security deposits and their resultant costs.”

When next considering ways to increase occupancy, consider the tennis courts that are never used, the opulent clubroom that sits empty during most days and the dry cleaning valet service that is used by only a handful of residents. Start looking at some of the unique services a community can provide residents that they will actually use.

Lisa Trosien has more than 20 years of industry experience. She can be reached at lisa@apartmentexpert.com. http://www.naahq.org/units/Units_Archive/june05/june05trosien.htm

4/1/2005 Multifamily Pro
Meeting of the Minds: Security Deposit Alternatives Align On-Site Needs with Corporate Objectives

3/4/2005 Multi-Housing News
NAA's National Lease Program Now Includes Language Addressing Surety Bonds

As part of this new provision, Blue Moon Software Inc., the official distributor of the NAA Lease Program software, has incorporated the new language in its rental forms made for Windows or available online for program participants.

Specifically, NAA's national lease program, accessed by apartment owners and management firms in Arizona, Florida, Georgia, Nevada, New Jersey, North Carolina, Pennsylvania and South Carolina, now feature standard language that deals with the offering of surety bonds as an alternative to traditional security deposits. (Versions of Blue Moon's NAA Lease Program Software have been issued for all states where the new provision is available, except in Florida and North Carolina, where the software will be issued shortly.)

Security deposit alternatives in the form of surety bonds are already offered to residents at more than one million apartment units nationwide.

"NAA's inclusion of this new lease language is a significant gauge of the role that security deposit alternatives now play in the apartment leasing process," said Paul Kaliades, president of SureDeposit, one of the nation's leading provider of security-deposit alternatives for the multifamily industry. Kaliades added that these security deposit alternatives can dramatically lower residents' move-in costs, while providing significant risk-management and marketing benefits to apartment owners and managers.

The National Apartment Association's National Lease Program allows participants to utilize a standardized lease that has been reviewed and approved by NAA's in-house counsel and expert attorneys retained at the state level, saving them valuable human resources and ensuring compliance with local statutes.

3/1/2005 Multi-Housing News
No More Bleak Houses: Residents These Days Have Great Expectations

Prospective residents who lease an apartment at any Marquette community have a choice between paying a traditional security deposit, which starts at $500, and paying as little as $87.50 for SureDeposit's security-deposit alternative. Nearly 80 percent of our residents select the SureDeposit option at move-in. They actually thank us for offering the program because they can see real savings in black and white.

Rick Harb is managing director of the Marquette Cos., a Romeoville, Ill.-based consortium engaged in the acquisition, management and development of commercial real estate

1/1/2005 Apartment Professional
Risky Business: Tap Security Deposit Alternatives as a Viable Marketing Tool

10/14/2004 Apartment All Stars E-Zine
Best Leasing Practices Close the Gap Between Vacancies and Signed Leases

5/3/2004 Indianapolis Business Journal
Local Apartment Developer Offering Deposit Substitute

Local apartment developer offering deposit substitute

Adams, Brent
472 words
3 May 2004
Indianapolis Business Journal
27
Volume 25; Issue 8; ISSN: 02744929
English
Copyright (c) 2004 Bell & Howell Information and Learning Company. All rights reserved

With ultra-low interest rates and an abundant supply of housing, apartmentdwellers across the country are opting to purchase homes rather than renew leases.

In Indianapolis alone, there are about 110,000 units, and, according to a November 2003 report by real estate investment brokerage Marcus & Millichap, about 10.6 percent were expected to be vacant at the end of 2003.

As a result, many apartment complex owners have been forced to become creative in their attempts to fill vacant units.

Flaherty & Collins Properties Inc., an Indianapolis-based multifamily property developer and manager. has introduced an alternative to security deposits for the nearly 3,000 units the company owns in Indianapolis, Cincinnati and northern Kentucky. It also will he rolled out at an additional 7,000 a apartments the company manages across the Midwest.

SureDeposit, a Livingston. N.J.-based company, offers a nonrefundable surety bond at a much lower cost than a standard security deposit. which often costs as much as a month's rent.

The company offers $500 worth of coverage for a one-time, non-refundable fee of $87.50. The fee is paid to SureDeposit when leases are signed. The bond is transferable if the tenant moves to another unit within the Flaherty & Collins portfolio.

Because the company's properties range from upscale apartments to subsidized housing for low-income families, SureDeposit sets bonds according to local market conditions and the perceived credit risk of prospective renters.

Not all renters will pay the same bond payment, though. Residents who have good credit may only be required to pay the base bond fee, while residents with marred credit may be asked to pay the base fee plus an additional security deposit. The sum of the two charges will be "considerably less" than paying a full security deposit, said Carrie Sietsma, director of marketing for Flaherty & Collins.

"We view this as a win-win for our properties and our customers," Sietsma said. "It requires a smaller cash outlay for customers at lease signing, and it takes work out of the collection end for our employees."

Using the SureDeposit system can be of benefit to property companies, who can collect payment from SureDeposit within 15 days of filing a claim for a damaged unit or for a renter who moved out still owing rent.

SureDeposit will pay the claim and attempt to collect the money from the tenant, relieving the property manager of a time-saving, costly burden.

"Typically, we have problems with people moving out owing back rent when the economy is down," Sietsma said. "Our people typically spend 30 days trying to collect back rent before it is turned over to a collection agency. This should eliminate some of that work."

Document IBJ0000020040513e0530000h

10/15/2003 AIM
Emerging Industry To Improve On Traditional Security Deposits

6/1/2003 Units Magazine
Multifamily Technology:Easing the Pain of Automation Integration

This article was originally published in the June 2003 issue of the National Apartment Association's UNITS magazine.

Multifamily Technology: Easing the Pain of Automation Integration

By Stuart Litwin, CEO
SureDeposit

Forward thinking multifamily companies are the driving force behind the numerous service company alliances that have sprouted in the past year. After all, service providers -such as screening companies, property management software providers, providers of security deposit alternatives and rent collection companies - can only theorize about the need to integrate and its value. Nothing happens until a client requests an integration of, for example, their property management software with their online screening service. The customer must drive this integration as the cost savings and process efficiencies that integration affords flow mainly to the customer.

In this age of specialization, multifamily service providers know from experience that no one vendor can provide the best product in all categories. Who wants to buy screening services from a laundry vendor, for example? It is impossible to be all things to all customers and do it all well. As a result, companies that offer property management software, online credit screening services, resident connection services, lead generation software, rent collection and security deposit alternative programs to the multifamily industry have begun to strategically align themselves, creating an opportunity for their clients to select the best of breed across the spectrum, while helping their multifamily clients capitalize on the benefits of automation, streamline their processes, and compete more effectively.

Resident screening companies are often at the center of these alliances, because they are an undeniably integral part of the leasing process. By forming alliances with other service providers whose product or service is also integral to the leasing process, resident screening companies have provided a value added service that becomes inherently more essential to their clients' processes. For their turn, providers of ancillary real estate services that ally themselves with resident screening companies can achieve greater market penetration and better assurances that their products are being offered consistently and uniformly during the leasing process. These symbiotic relationships are ensuring their respective sustainability in competitive times.

For example, resident screening companies are partnering with companies that offer security deposit alternative programs and renter's insurance. The benefits are clear: by integrating one technology with complementary services, together they provide the leasing agent with much greater efficiencies in terms of streamlined data entry and sales processes. In addition, automating these integrated services helps ensure that the leasing agent is more accurately and consistently complying with Fair Housing standards, as well as the parent company's own corporate leasing standards and policies. This leaves less margin for error, something especially important in multifamily companies challenged with high leasing staff turnover.

For example, if an owner offers his residents the choice between paying the traditional security deposit or paying for a security deposit alternative, an integrated resident screening and security deposit alternative process will improve the chances of the leasing agent offering the prospective resident the choice at the correct time during the leasing process and at the correct price.

Property Management Software Companies Consider Avenues for Growth

While screening is integral to the leasing process, property management software is also utilized by nearly 100% of leasing agents. Very often the property management software -- the real estate industry "enterprise software"-- will serve as the "hub" for other services and technologies. As a result, some providers of property management software have introduced their own ancillary services such as screening services to allow them to capture the benefits of every tentacle of the transaction. As opposed to customer-driven integrations, these add-on services are often driven by a mergers and acquisition team, or business development team, whose job it is to make strategic decisions about synergies, potential subsidiaries or new program development.

Multifamily clients have made it clear they value the opportunity to work with open systems that leave them more options to select service providers of their own choosing. So property management software companies are often caught in a quandary: What if a customer likes our software, but doesn't like our screening service? Further, the customer has requested we allow our screening competitor to integrate with our software. To save the core business, the customer's wishes clearly must be heeded, despite the obvious potential downside of integrating competitive products and the drain on their management and IT staff time to make these integrated partnerships happen.

New Scenarios Call for New Measures

In response to the expanded deployment of technology by multifamily companies and the industry's ambition to operate on compatible platforms, the Multifamily Information and Transactions Standard (MITS) initiative has taken critical steps toward creating a shared data standard (http://www.mitsproject.org). This industry-wide initiative will more easily allow apartment firms to implement a wide range of new technologies because the need for disparate systems to be able to communicate with each other requires a common data standard. Launched in March 2002, the MITS standard is making it easier to customize technologies, reduce the costs associated with integration and improve the overall quality of the information owners and managers collect as part of their operating processes.

Under the umbrella of NMHC's Technology Forum, the National Multi Housing Council is supporting the creation of an industry-wide initiative to establish data standards and extensible mark-up language (XML) architecture to enhance and support the development of systems solutions for the apartment industry. "Having a standard set of definitions and extensible mark-up language schema is not required, but it will enhance the industry's investment into a wide range of business process improvement technologies," according to David Cardwell, Vice President of Finance and Technology for the National Multi Housing Council and Director of the MITS initiative. "The apartment industry spends over $1 billion annually on systems technology, and having the standard provides a common bridge between business processes and the automation being implemented."

The industry is also defining new ways of doing business. Consider for example, a large multifamily owner requests that a provider of security deposit alternatives integrate a resident screening service that is owned by the same company that also offers a competitive security deposit alternative program. In an effort to meet apartment owners' and managers' demands for an open system, this form of "co-opetition" (cooperation among competitors) is creating some unusual business bedfellows. The prime beneficiary is the property owner or management company.

Given the velocity of change, potential for co-opetition and competitive pressures among real estate technology companies, what should owners and property management firms consider when looking at potential technology partners and service providers?

Perhaps the best answer comes from Linda Willey, Director of Ancillary Services for technology-savvy Camden Property Trust, one of the nation's largest multifamily REITs and winner of the 2000 Multifamily Executive Award for the Best Use of Technology. Camden is continuing to work to enhance its suite of software and online services that currently includes property management software, a security deposit alternative program, resident connection services, a renter's insurance program, an online resident screening service and an online procurement system for supplies and maintenance services. The firm has had extensive experience in selecting and integrating myriad platforms to streamline processes at the corporate and property level. Linda offers the following suggestions:

- Responsiveness and professional service still matter. Make sure the real estate service provider has the back office and customer service operations to support your onsite teams and corporate management requests.

- Technology for technology's sake is unnecessary. Make sure the software and services you are considering really afford you added efficiencies and functionality.

- Be sure that the software programs can integrate with a modern system. More and more multifamily companies are making those final breaks with legacy systems.

- Confirm that the provider's technology standards are compatible with emerging MITS standards.

- Implement new services only when your property management platform is stable. Resist the temptation to implement too much too soon.

- Investigate what your vendor can do to ease the pain of integration. Find out which of your company's resources -- financial and human -- and how much of these resources will be required throughout the implementation process.

- Look for vendors that are flexible enough to develop proprietary technologies for you if you require them.

- Make sure the provider takes the necessary steps to accurately assess your company's needs. Do they understand your business and technology issues at both the corporate and property level?

- Consider the vendor's longevity and viability. With many dot coms having come and gone in recent years, real estate owners and managers need to be sure that the real estate service provider will be there tomorrow, especially considering the complex and integrated network of platforms and software.

- When planning an integration, make sure your vendors consider every case scenario during the planning stages.

- Look at your vendors' password integration technology, not only from a maintenance issue but also from a security standpoint. This can be a real quagmire for many systems and software.

- Evaluate how much integration with other business solutions each vendor comes to the table with. Are they willing to turn on and off partners at your request?

- On the other hand, by considering a vendor with a variety of other partners, owners and managers are forced to think more "out of the box" in terms of the potential for services they can offer, raising the bar on their level of technology integration and ultimately, services to their residents.

Stuart Litwin is CEO of SureDeposit. With more than 500,000 units in nearly 1,650 communities under agreement, SureDeposit is the nation's leading alternative to traditional security deposits. SureDeposit recently relocated its headquarters to Livingston, New Jersey, and has regional offices in Arizona, California, Florida, Georgia, Rhode Island and Texas.

For more information, call 1-877-531-SURE (7873), or visit online at www.suredeposit.com.

5/1/2003 Apartment Professional Magazine
Make Your Suppliers Train You

1/15/2003 Apartment Professional Magazine
Follow The Leader: Margaret Phillips

12/23/2002 Real Estate News
SureDeposit and Resident Check Announce Strategic Alliance

RISMEDIA, Dec. 23–SureDeposit, a provider of security deposit alternatives to the multifamily industry, and Allied Companies, a national resident screening and pre-employment screening service, have announced a new strategic alliance.

SureDeposit will be offered automatically during Allied's ResidentCheck screening process to prospective apartment residents of any Allied owner- or property manager-client that is also bonded under the SureDeposit program.

ResidentCheck is an Internet-based, turnkey resident verification program developed specifically to meet the needs of multifamily owners and property managers. As a result of the alliance, during the leasing process, SureDeposit's enrollment form will automatically appear with the applicant's data already entered when a leasing agent or owner logs on to Allied's online resident screening process.

"Apartment owners and property management companies are constantly looking for ways to improve processes and reduce their exposure. This alliance between SureDeposit and Allied does both," explained SureDeposit CEO Stuart Litwin. "Streamlining two simple processes into one convenient step simplifies move-in even further and minimizes errors, while helping owners and managers better comply with established policies governing leasing criteria and security deposits."

"In addition to creating a seamless, more user-friendly leasing process, this agreement with SureDeposit allows us to expand our product offerings to create an even more sophisticated and integrated risk management program for our clients, while helping them to attract quality residents by reducing their move-in costs," explained Jorge Baldor, president of Allied Companies.

For more information, visit www.residentcheck.com or visit www.suredeposit.com.

RISMEDIA welcomes your questions and comments. Send your e-mail to: editorial@rismedia.com

6/3/2002 California Real Estate Journal
Deposit Insecurity
Deposit Insecurity

New legislation and services may change an apartment industry standard

By Michael Gottlieb
CREJ Assignment Editor

Of the state's more than 6 million apartment units, almost all require a security deposit. Ranging from two months rent to $99 move-in specials, the average security deposit is equivalent to about a half month's rent, according to the California Apartment Association, which represents about 50,000 property owners and managers with 2 million units.

With limited new construction and population growth a constant, demand for rental housing remains strong in California bolstering the multifamily investment market. The shortage of housing is especially acute for low-income renters who find security deposits to be a growing financial barrier to entry.

This trend is not only driving a push for legislative reform of the state's security deposit law, but also is creating a market for security deposit alternatives, which reduce the initial cost of moving into a new apartment and provide security for landlords' investment.

AB2330

A new piece of legislation to expand renters' rights offers the biggest change on the horizon for security deposits.

Introduced in February by Assemblywoman Carole Migden, D-San Francisco, and poised for approval at the end of May, AB2330 attempts secure a larger share of security deposits for tenants by clarifying the language of existing security deposit statutes regarding what constitutes "wear and tear." It also requires landlords to do a walk through with tenants before moving out and mandates security deposits be kept in interest-bearing accounts paying 1 percent less than the Federal Reserve Discount Rate, which historically hovers around 4 percent. If approved, the law will go into effect Jan. 1.

Debra Carlton, vice president of policy and research for the California Apartment Association, said AB2330 represents the most significant legislative push to reform security deposit laws in a decade.

"Probably, we wouldn't be seeing this type of legislation if we didn't see such a tight housing market in some areas of the state," she said.

Industry observers say AB2330 could have a dramatic influence on landlords statewide in an area that is already a primary cause for conflict.

"Security deposit law is probably one of the most contentious areas of law, where owners and tenants most frequently find themselves before a judge," Carlton said.

Indeed, AB2330, which has already seen provisions struck that would have required landlords to allow new tenants to pay a portion of the security deposit in installments, and prevented retaliation against tenants, was created out of controversy.

The bill was sponsored by the Association of Community Organizations for Reform Now, which has been studying the issue of high housing costs for the past year, according to Brian Kettenring, campaign director for the California branch of the nationwide nonprofit advocacy organization. "It came out of a concern of how do you make it easier for working-class tenants to rent their next apartment," Kettenring said.

AB2330 was co-sponsored by the Service Employees International Union, a usual pairing according to observers, who say that unions have historically avoided such issues.

"There is a lot of frustration along the forgotten working class. That was the insight we learned from Kawamoto," Kettenring said, referring to real estate investor Gensior Kawamoto, who came under fire in March when he gave the mostly working-class residents of 569 Sacramento units he owned a month to vacate because he intended to sell the properties. Kawamoto later extended the eviction notices to 90 days and has since filed suit against CB Richard Ellis, claiming the company failed to notify him of repair requests and did not refund tenants' security deposits within the 21-day statutory period.

"Those evictions raised the profile of renter issues," Kettenring said.

Alan LaFaso, chief of staff for Migden, said AB2330 is focused on the subset of landlords who are problem cases and not the average landlord, who endeavors to work with tenants.

"Certainly, with regard to transitioning from dwelling A to dwelling B there is a notion of fairness that the tenant ought to get back all of the security deposit, less the cost of the things the tenant is responsible for," LaFaso said.

Nonetheless, the landlord community opposes the bill, despite it being toned down significantly. "They [landlords] view themselves as the best actors, but often rules are written focused on the worst actors," LaFaso said.

The objections to AB2330 are stronger than that. Ted Kimball, founding partner of Kimball, Tirey & St. John, a statewide landlord-tenant focused law firm representing owners and managers, said paying interest on security deposits amounts to a clerical headache for landlords that will cost more to process than tenants will receive in payments.

"It overburdens the landlords and puts more pressure on them to increase rents or security deposits," Kimball said. "They are going to have to make up the costs somewhere. We don't think it is the right solution for affordable housing."

Moreover, Kimball said that the statute changes intended to better define normal wear and tear have ambiguous language that will make things worse in laws one judge said made him feel like "Alice in Wonderland" upon review.

Kimball said that the law is fairly clear in stating that there will be no automatic deductions for cleaning and painting. He said the market ultimately controls security deposits and additional layers of legislation will only increase costs to landlords.

"Although it is well meaning, I think Migden is misplacing her desire to help her tenant constituency," Kimball said. "The end result will not help residents in the long term."

Both sides of the debate seem to agree, however, in a need to build more housing units that are affordable to a range of tenants from low to middle income.

"One of the keys is to get more housing build," Kettenring said. "But that doesn't mean that renters don't have a right to a level playing field."

Security Deposit Alternatives

While the legislative debate continues, traditional security deposits face challenges from market forces as well. "Owners have to change their practices when the market starts to change," Carlton said. "You want to get those tenants in, and the competition for those tenants is fierce when the vacancies start going up."

Besides forcing apartment owners and managers to change how much they require tenants to pay in security deposits, the market is also driving some to explore alternatives to security deposits such as paying in installments or charging premiums for bonds to cover repairs.

In the early 1990s, municipalities, housing authorities and nonprofits throughout the state experimented with security deposit guarantee programs, where tenants paid security deposits in installments, with cities, counties or agencies such as the United Way providing guarantees to landlords.

Municipalities in which versions of the program were created, include Marin and Monterey counties and the cities of San Diego and Santa Cruz.

Paying a Premium

The concept of insurance in lieu of security deposits offers another alternative - one that is attractive for some tenants and property managers. Madison, N.J.-based SureDeposit has recently expanded into California, offering surety bond guarantees to protect property owners' portfolios.

Tenants pay a one-time, nonrefundable premium to SureDeposit when they sign a lease with a participating property owner. The bond covers the lifetime of their tenancy and can be moved between participating properties without additional premiums. If any damages or lease violations occur during tenancy, owners file a claim with SureDeposit for reimbursement while the company assumes all collection and recovery activity. A portion of the premiums goes back to the property owners. A typical unit premium would be $87.50 for $500 in coverage, $175 for $1,000 coverage, with premiums increasing incrementally.

"You can market your property as 'no security deposit necessary,'" said Terry Baner, western regional marketing director for SureDeposit. SureDeposit has 400,000 units under agreement nationwide and bills itself as the market leader in security deposit alternatives. About 12,000 California units are signed up for the program. USA Multifamily Management Co., a Roseville-based company that manages 5,200 units in California and Nevada, targets senior citizens and moderate-income families earning between $20,000 and $45,000 a year as tenants. USA Multifamily offers the SureDeposit program in all of its properties, according to Karen McCurdy, president. "It has been very well received," she said. "We give applicants the choice.

They can put down a refundable deposit or they can purchase a bond. They overwhelmingly will purchase the bond ... about 95 percent." Robert Salwasser, a partner with Income Property Specialists, has 300 units under agreement with SureDeposit in the Bay Area. Salwasser said he was driven to use the service in 1999 because rents were climbing along with risk.

"I was getting a lot of tenants coming from outside of California and the security deposits weren't going up," he said. "I was feeling some increased risk regarding people coming from outside California."

Salwasser had no choice but to begin raising security deposits. "It started to double the amount of money tenants would need just to move into a place," he said. "It was affecting our ability to market properties."

Now, Salwasser said SureDeposit has reduced the risk of loss. "In the past, I'd have to turn the tenants into a collection agency, and then, if I lived long enough, I'd get half back," he said. Although they've found success with security deposit alternatives, both Salwasser and McCurdy say that security deposit practices are directed best by the need to keep apartments occupied.

Salwasser pointed to the example of landlords offering $99 move-in specials in the Bay Area just a year after the region was one of the tightest and most expensive markets in the country. "We are far from monopoly status; the marketplace will always dictate that," he said.

McCurdy doesn't see the market clamoring for widespread security deposit reform. "I tend to think these things are cyclical," she said. "What's really key is that once landlords start seeing they have some vacancy, then down comes the security deposit."

5/1/2002 Orange County (California) Register
Renters Find Security in Bonds

Renters find security in bonds // Housing - New option to traditional deposits can save tenants up front.

By Jennifer Hieger
The Orange County Register
Edition: 1
Section: Business
Page: OC_Region

Some local renters who used to struggle to scrape together a security deposit are finding they don't need to worry any longer.

They now can choose an alternative to the traditional security deposit -- one with lower up-front costs.

SureDeposit, based in Madison, N.J., sells bonds that act as stand-ins for deposits.

It works like this: A renter pays a one-time, nonrefundable fee to buy a bond. The bond is a guarantee that SureDeposit will cover the landlord's costs in the event the renter damages the apartment or breaks the lease.

The amount of money the landlord is guaranteed depends on how many bonds, which are sold in increments, are purchased. One thousand dollars in coverage costs $175, for example.

The chief selling point is that renters don't have to spend as much up front.

"It allows tenants to keep their money in their pockets," said Terry Baner, West Coast marketing director for SureDeposit.

But the bonds are not a form of insurance. In other words, renters still are on the hook for any damage they do.

For example, a renter who paid $175 for $1,000 in coverage and later gouged holes in the wall that cost $500 to fix would be out the initial $175, in addition to owing $500 for the damage. In this scenario, SureDeposit would pay the landlord, then bill the renter for the damage.

The model is catching on. The company, which was founded in 2000, is selling bonds nationwide at nearly 1,200 complexes with some 400,000 residents.

The company has only a small presence in California, serving apartment complexes with a combined 7,500 renters.

One management company, USA Multifamily Management, offers the bonds at all of its properties, including one in Brea that rents to low- income seniors. Renters have a choice between paying a traditional deposit or buying a bond.

About 90 percent of the tenants have opted for the bonds, said Karen McCurdy, president at the management firm.

"We actually do care about the people who are moving in. We're sensitive to the fact that they're on fixed, lower incomes," McCurdy said.

But Elizabeth Pierson, president of the Fair Housing Council of Orange County, worries that the bonds aren't such a good deal.

A renter who buys a bond and leaves an apartment pristine still is out money, Pierson said.

Security deposits, on the other hand, are refundable.

"The tenant isn't really getting any protection," Pierson said. "The people this would appeal to are those who could afford it the least."

Despite the criticism, many renters like what they see.

Mabel and Harry Courter moved from Illinois to Brea a year ago in search of better weather. The move was expensive, so Mabel Courter said she was relieved to learn the complex offered renters an alternative to the standard security deposit.

"I was thinking I'd have to pay a deposit and when they told me about the bonds, I took that because it was such a savings," she said.

The couple bought a $175 bond in lieu of a $1,000 deposit. Mabel Courter said she isn't bothered that she won't get that money back, even though she intends to leave the apartment in good condition.

The lower initial cost was a fair trade, she said.

Contact Hieger at (714) 796-7929 or jhieger@ocregister.com

2/8/2002 Boston Herald
An Alternative to Security Deposits
An alternative to security deposits

by Karen Ukraine
Special to the Herald

The real estate rental market has experienced a downturn in recent months, and many landlords and property managers are finding it harder to find quality

applicants willing to pay the high rents and high move-in costs, such as first and last month's rent, and sometimes broker's fees on top of that.

The SureDeposit program offers a solution that benefits both residents and owners, by providing an alternative to the traditional security deposit.

SureDeposit began about five years ago, and now has almost 300,000 units nationwide participating in the program, which offers a much lower security deposit for renters, while guaranteeing financial security to owners, as well as taking over administrative responsibilities for property managers.

Several leading multi-property owners, including Princeton Properties and Roseland Property Company, have recently signed agreements with SureDeposit.

The way the program works is simple: a new tenant purchases a surety bond issued through SureDeposit at the time of signing the lease. This is in lieu of the traditional security deposit, and "it is a one-time, non-refundable premium," said David Williamson Jr., regional marketing director.

Williamson added that the premium is only 17.5 percent of the resident's usual cash outlay, which means if a resident would normally pay $1,000 for her security deposit, she would pay only $175 under SureDeposit.

Coverage applies for the life of a resident's lease, and follows the resident to any participating apartment or community within that company's portfolio. For instance, a tenant at Princeton Properties' Princeton Reserve, in Dracut, could move to Essex House, in Salem, and not have to pay another security deposit.

Of course, all residents must go through the usual approval process set up by the landlord or management company, and they must meet all normal rental obligations, including returning the apartment in good condition.

The advantages of SureDeposit for property owners are multi-fold, according to Williamson.

"SureDeposit is a superior risk management tool," he said, "because property management companies do not have to jeopardize their balance sheet by lowering security deposits."

Williamson noted that SureDeposit can also be a great marketing tool.

"You can promote and advertise it in addition to your regular marketing to attract prospective residents. This is an alternative to the `small mortgage' that many renters feel they now have to pay when moving into a new place," he said.

Claire Collins, vice president of Leasing at Princeton Properties, said that her Portland, Maine, property saw a "38 percent increase in rental applications over the same period the year before."

Princeton Properties has been in the property management business for almost 25 years, with a portfolio of more than 5,000 apartments in 32 communities, including Chelmsford, Lowell, Andover, Methuen and locations in Maine. Collins said, "I expected about 50 percent of our new residents to opt for SureDeposit when we signed on," but it turned out to be closer to 95 percent.

SureDeposit makes it as easy as possible for companies to implement the program by conducting initial training sessions to get them up and running, and then meeting with the managers monthly. They require no separate screening process for applicants.

In the unfortunate event that a lease violation occurs, or damages, the owner would then file a claim with SureDeposit for prompt reimbursement, usually within two weeks of filing.

Next, it is SureDeposit's responsibility to collect reimbursement for the claim from the resident, who under terms of the bond, remains fully liable for his lease obligations. Here again the owner benefits as all administrative expenses associated with collections are mitigated, in addition to not having to chase down the resident.

SureDeposit also reimburses owners for the administrative costs of dispensing the program throughout their portfolios.

"Owners let the residents decide whether they would prefer the traditional route," said Williamson. In addition, owners might even option to have people who are already tenants take back their security and buy the surety bond instead.

Roseland Property Company has a very large presence in the Northeast, including the Massport Redevelopment project on East Boston's waterfront. Last month, Roseland started renting units in The Highlands at Faxon Woods, a newly constructed, over-55 adult apartment complex in Quincy."We chose SureDeposit because it is an incentive for people to choose our community over another comparable one," explained Sharon Burkey, president of Roseland Management Company. "The prospective tenant will be putting up a lot less money up front. And especially for seniors, this is possibly their last home, so it makes more sense to buy the bond."

12/11/2001 REBUZ.com
Innovative Security Deposit Alternative Arrives in New England

SureDeposit introduces security deposit alternative to the New England apartment industry

Princeton Properties Already Reports 38% Increase in Applications at Portland, ME, Properties

Madison, NJ -- SureDeposit, a national provider of security deposit alternatives, has announced that its innovative risk management program is now available to apartment residents located throughout New England.

Through agreements that SureDeposit has signed with several of the region's leading multifamily property owners, including Princeton Properties, Roseland Property Company and Corcoran Management Company prospective apartment residents throughout Maine and Massachusetts will now be able to purchase a surety bond at a nominal premium instead of paying a traditional security deposit at move-in.

Specifically, Corcoran Management Company's Hawthorne Commons in Salem, MA, comprised of 120 units, and Roseland Property Company's The Highlands at Faxon Wood in Quincy, MA, comprised of 196 units, both new construction, are leveraging the marketing appeal of SureDeposit to help achieve maximum occupancy levels, according to David A. Williamson, Jr., SureDeposit's Northeast regional marketing director.

Princeton Properties also initiated the SureDeposit program at several existing properties in Portland, ME, where security deposits typically equal one month's rent plus $200, the maximum allowable by Maine statutes. Specifically, more than 470 units located at Forest Park, Princeton Ridge, Princeton Pines and Princeton Village now offer the SureDeposit program to all incoming residents, where rents range from $695 for a one-bedroom unit to $995 for a two-bedroom townhouse. For example, for a one-bedroom apartment, a resident that selects the SureDeposit program may pay a one-time, non-refundable premium of $175 versus an $895 security deposit at move-in.

"The multifamily market has changed over the last year. A slow down in the high-tech sector, the events of September 11, and in general, a slowing economy have all, to some degree, contributed to a softening real estate market, not just in New England, but nationally," explained Williamson. "Multifamily owners such as Corcoran Management Company, Princeton Properties, and Roseland Property Company are leveraging SureDeposit to establish or retain their competitive advantage even as other owners in those markets reduce the amount of the security deposits in an effort to attract prospective residents. The SureDeposit program can help owners accomplish the same goal without putting their balance sheet at risk."

"In addition to maintaining good risk management principles, we also wanted to make our good 'product' in this market even more attractive, while providing our residents with the added benefit of lower move-in costs," explained Claire Collins, Vice President of leasing and education for Princeton Properties. "Further, SureDeposit's program was very easy to implement. Its management team's strong multifamily background and experience is evident not only in how the SureDeposit program addresses both owners' and residents' needs, but also in the way they supported us through training and installation."

According to Collins, "The initial response to SureDeposit at our four Portland communities has been fantastic, and from the first day the program was offered, residents selected the SureDeposit program when they rented a unit at one of the Portland communities. In fact, in just six weeks, we have seen a 38% increase in rental applications over the same period last year, a figure that speaks particularly well for SureDeposit in the current market environment."

Princeton Properties has been acquiring and managing apartments, furnished suites and suite hotels in Massachusetts, New Hampshire, Maine and Florida since 1973. The company currently has more than 5,000 units under management in 30 apartment communities and is one of the largest providers of corporate furnished apartments in the Northeast. Princeton Properties received the prestigious Pillars of the Industry Award for Property Management Company of the Year in 2001 from the National Association of Homebuilders.

Roseland Property Company is a New Jersey based, full service real estate organization primarily involved in the development and construction of residential properties throughout the Northeastern United States. With strong historical expertise in land use, construction and property management, the Roseland family of companies is positioned to maximize the value of its real estate portfolio comprised of 2,200 units under management, more than 150 assets, and a portfolio of more than 13,000 units of developable multi-family land.

SureDeposit's surety bond guarantees the protection of the property and enhances risk management to property owners. Residents pay a one-time, non-refundable premium, which is a fraction of the standard deposit, to SureDeposit when they sign their lease. The bond covers the lifetime of their 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. If any damages or lease violations occur, owners file a claim with SureDeposit for prompt reimbursement. A competitive marketing tool, SureDeposit also reimburses participating property owners and management companies for the administrative cost of dispensing the program throughout their portfolio, providing them with opportunities to generate ancillary revenue.

SureDeposit is headquartered in Madison, New Jersey, and has offices in California, Florida, Illinois, Georgia, Pennsylvania and Massachusetts. With nearly 300,000 units under agreement, SureDeposit is the leading alternative to traditional security deposits.

10/1/2001 Apartment Finance Today
Leasing Techniques: Moving Beyond Traditional Security Deposits

"SureDeposit assumes all collections and recovery activity, including claim amounts in excess of the bond coverage, which mitigates all administrative expenses."
Dan Rudd, CFO of SureDeposit
(October 01, 2001) - An Indiana based apartment firm that owns and manages more than 5,000 apartments, has discovered that 80% of its new tenants prefer paying a small fee at the signing of the lease instead of posting a security deposit.

Instead of requiring a security deposit, scores of apartment firms are using SureDeposit, a surety bond program that can help leasing agents sign up tenants faster. Reducing the out-of-pocket expenses that incoming residents have to pay not only expedites the leasing process, but also attracts more traffic to the leasing office, according to SureDeposit.

"SureDeposit is a dynamic closing tool that speeds up the leasing process," said Dan Rudd, co-founder and CFO of the Summit, N.J.-based SureDeposit. "Once a qualified prospective resident is given the opportunity to move in at a greatly reduced cost, the deal is sealed."

SureDeposit is a risk management tool because residents pay a one-time, nonrefundable fee to SureDeposit that guarantees the resident will perform in accordance to the terms of the lease agreement. The bond amount is 17.5% of the amount of coverage desired.

If the apartment is damaged during the resident's stay, managers submit the claim to SureDeposit at move-out. The owner is reimbursed within 15 days by SureDeposit, which then collects reimbursement within 15 days by SureDeposit, which then collects reimbursement for the claim from the resident under the terms of the bond agreement.

Owners and managers benefit not only from the coverage they receive from SureDeposit, but also from the reduced administrative costs involved with requiring a security deposit. "Conventional security deposits are an administrative burden and cost center that has long been considered a 'cost of doing business,'" Rudd said. "Each step in the process costs the property owner in both time and money.

"SureDeposit assumes all collection and recovery activity, including claim amounts in excess of the bond coverage, which mitigates all administrative expenses," Rudd said.

In addition, SureDeposit reimburses property owners for the administrative expenses incurred in administering the program to their tenants. "SureDeposit offers us an incentive upfront for offering it in our offices," said a vice president of the Indiana based management company. The apartment firm owns and manages properties throughout Indiana and Michigan, and offers SureDeposit at two-thirds of its portfolio.

"They provide a generous expense reimbursement back to the property, so on balance, it's a profit center," hesaid.

"The response has been overwhelming; about eight out of 10 people will choose SureDeposit," he said. "With the time value of money, they'd rather pay the one-time fee and then keep their money for themselves."

Residents benefit from the reduced out-of-pocket expense, and leasing agents also can utilize SureDeposit in their advertising to attract more prospects. "It's a marketing tool as well," said Rudd. "You'll have clients that check out the security deposit options in ads, and seeing something that says 'Move in without a security deposit' is a great lure for residents."

Giving residents the choice between the traditional security deposit, and SureDeposit was one of the lures for the management company.

"It's important to us that we can give our residents the freedom to choose, and the program is very user-friendly for residents," the vice president said. "The company also allows us to be flexible, which is a great closing technique."

SureDeposit was offered at 682 properties as of August, and is being implemented in another 650 communities this fall.

10/1/2001 The Key
Renters Offered Security Deposit Options

12/24/2000 Naples Daily News
Program Offers Aid For Would-be Renters

Program offers aid for would-be renters

By Laura Layden, Staff Writer

More than 60 apartment communities in Florida have the SureDeposit program, including seven local complexes

For an apartment that rents for $1,000 a month, a renter would typically pay a move-in cost of $2,000, including the security deposit and other expenses. Through the SureDeposit program offered by a handful of apartment complexes in Lee and Collier counties a bond can be issued to cover the security deposit, significantly cutting down on a renter's up-front expenses.

At this time of the year scraping together $1,000 to cover a security deposit might be difficult, if not impossible.

Some might put off a move to a new apartment because they just don't have that kind of money. But there is an alternative available to local renters that can get them moved in for a fraction of the cost. It's called the SureDeposit program.

The renter would still have to pay the first and last month's rent if that is what the landlord normally requires. But instead of

paying a steep security deposit on top of that, renters can purchase a non-refundable bond equal to 17.5 percent of their monthly rent.

If the security deposit is $1,000, for example, a renter would pay $175 for a bond to cover it.

"It's almost like you're buying an insurance policy, but it has no expiration date," said Gabriel Berardo, a spokesperson for Converge Services Group, a New Jersey-based company that owns the SureDeposit program. "It covers the resident for life. If the resident wants to move to another apartment community that has SureDeposit, they can just transfer it over."

Renters can use their bond to cover their security deposit at another property owned by the same company only if they meet all the obligations under their lease, including paying for any damages.

Even with the bond, renters are responsible for paying for any damages they've done to their apartment. SureDeposit only pays for damages if the renter does not, and will then go after the renter to collect the money back.

If the security deposit at their new apartment is higher at their new apartment, renters will need to buy additional bond coverage.

More than 60 apartment communities in Florida have the SureDeposit program, including seven local complexes. In Collier, the program is available at Berkshire Park, Heron Park, Osprey's Landing and Windsong Club. In Lee, it's offered at Antiqua Bay, Montego Bay and Riverwalk.

Concord Management Ltd., which manages many of the local apartment communities that offer SureDeposit, joined the program in 1996. The company, which manages about 100 rental communities in 13 states, was one of the first companies to sign up for it.

"It's definitely a phenomenal program," said Karen Petersen-Gutierrez, who administers the SureDeposit program for Concord. "The program works. It helps increase our bottom line."

Not only does the program cut down on a renter's expenses it also protects apartment owners and managers from renters who skip out without paying for damages. Converge Services sets aside a percentage of the bond money it collects to be used for claims against renters, and will pay an apartment owner up to the maximum coverage of the bond for damages.

"You would be amazed the damage people will cause accidentally, such as wax on the carpet, Kool-Aid stains from children or adults, wine on the carpet and holes in the wall from opening the doors too hard," Petersen-Gutierrez said. "Sometimes you just can't collect from them because you can't find them."

By signing up for the program Concord has not only limited its risks but made its properties more competitive. The company has seen higher occupancy rates because renters can get in an apartment for less money by using SureDeposit.

SureDeposit was founded as the Tenant Security Deposit Bond Program by Bankers Insurance Group, but was renamed when it was acquired earlier this year by Converge Services Group based in Summit, N.J.

Eleven investors, led by a group of long-time real estate service executives, got together to buy out the program and form a real estate services firm called SureDeposit to administer it.

Ron Davies, president of SureDeposit, actually had the idea to launch a security deposit bond program. He got the idea while working for Archstone Communities in Denver, which is one of the 10 largest apartment companies in the world.

With a little research Davies discovered the bond program offered through Bankers Insurance Group. He mustered together some of his former colleagues to take over the program and has worked to expand it during the last seven months.

SureDeposit now has $12 million worth of surety bonds in place. Recently, the company set up two new regional offices in California.

"Since May we've gone from six clients to 21 clients," said Dan Rudd, chief financial officer for SureDeposit. "We've gone from those six clients with 40,000 apartments to 21 clients with more than 150,000 apartments."

The company has clients across the country, but apartment owners and managers in Florida have been especially eager to sign up. In the state, 14,000 residents have taken advantage of SureDeposit including renters in the Naples and Fort Myers areas.

"Florida has always been a great market for us in part because we have a great marketing person in Florida and in part because Florida apartment owners have been extremely receptive to offering the product," Rudd said.

Heading up marketing efforts for the state and the Southeast region is Margaret Phillips, who worked for Bankers Insurance Group for many years.

The CFO feels apartment owners in Florida have warmed up to the idea because there is so much competition in the state with so many communities to choose from.

SureDeposit is looking to grow its client base across the country within the next few years.

"The target we have set is 1 million apartment units nationwide within two years to be sold to 400,000 residents," Rudd said. "We can't make a sale to every apartment. Not everyone moves out every year and our product is offered most frequently at the time new tenants are moving in. Also, there is no instance where it is required."

SureDeposit executives are expecting to see more competition in the tenant security deposit bond arena. When Davies was researching bond programs he found just two companies offering them. But more companies are expected to jump on the bandwagon.

"We firmly expect to have competitors," Rudd said. "We are in a very popular market space."

Contact Information

Company Contact:
SureDeposit
Dan Rudd
Tel: (973) 992-8440 ext. 304
dan@suredeposit.com

Media Contact:
Nina Dietrich, L.L.C.
Nina Dietrich
Tel: (201) 493-8944
nina@ninadietrich.com