Rent Guarantee Companies: What You Need to Know

Income loss due to missed rental payments and vacancies is a perennial concern for landlords. And those concerns have had reason to increase in recent years thanks to rising rents. Perhaps it's no surprise that there's also been a rise in rent guarantee companies that promise to fill the gap when tenants go bad.

How companies deal with delinquent tenants can vary widely.   Property managers, for example, promise to do the work of collecting rent for you and keep your property rented as often possible while also dealing with construction, maintenance, and other issues that come with being a landlord. Property managers also help handle evictions if tenants fail to fulfill their obligations under the lease, but unless they are working with an insurance provider, they have limited options to guarantee rental income legally.

Others offer insurance products that take a one-size-fits-all approach and include all sorts of additional coverage that landlords don't want or need — making them pay for more coverage than they want or need. For instance, why would you buy two large pizzas when you'll only eat one? You wouldn't — so why would you buy more insurance coverage than you need? Or why would you order a pizza with ten toppings, when you don't like toppings? You wouldn't. So why let insurance providers force you to buy coverage you don't want?

At Steady Marketplace, we offer  rent guarantee insurance that provides cash flow certainty. We don't worry about getting you the right tenants or attracting new tenants; we leave that to professional property managers and leasing agents, who we partner with in order we help end landlords cover tenants that meet broad criteria and customizable coverage options. We know that as a rental property owner, you want regular, predictable cash flow, which is exactly what we provide: tenants fail to pay rent on time, your insurance covers the bill, so you never go without a check. It's that simple.

Most insurance plans come with a deductible. Your health plan might pay expenses after the first $2,500 in fees is paid out of pocket, for example. Imagine if this same formula were at play in buying insurance from a rent guarantee company. At best, you'd be out at least the first month of lost rent before collecting reimbursements. Since the same tenants that skip out on rent are usually the same that trash your unit, you'll be left exposed if your rent guarantee provider has a deductible requirement. Monthly cash flow from your property investment would be much tougher to predict, which, in turn, would make it tougher to reinvest what you earn.

There's no reason to choose a rent guarantee plan that fails to deliver 100% of the rent owed to you. Even if a tenant has a good reason for defaulting — such as an unexpected medical emergency — your coverage should never leave you unprotected

Some rent guarantee companies offer coverage for the lowest common denominator — one type of product for one type of problem. The trouble with this approach is that it assumes all landlords have only one type of problem tenant and that every jurisdiction has the same laws governing landlord-tenant relationships.

The truth is that the lack of sophistication by other providers shouldn't force you to fit a round peg in a square hole. We all know no two property owners attract the same types of tenants, so why would the insurance coverage be the same everywhere? There are more laws and regulations for landlords than colors of the rainbow; don't paint yourself into a corner because your rent guarantee providers want to make you buy more coverage than you want or need.

While it's common for most types of insurance to have disclosures and exclusions, rent guarantee coverage should be simple and straightforward. If it's not clearly spelled out that, in buying, you're ensuring consistent, 100% predictable cash flow each month, you're probably signing up for coverage with so many exclusions you'll be headed for disappointment when your tenants default — and an unpleasant dip in your income at precisely the wrong time. Keep an eye out for the gotchas, fine print, and confusing wording — like being forced to buy more insurance than you need, this comes at your expense. Another issue to be concerned with is window dressing and advertising high coverage limits that are next to impossible to ever successfully make a claim on — another tactic to drive up your cost without providing you with any tangible benefits.

Ready to protect your rental property investment? Steady's straightforward, customizable rent default insurance is easy to get and comes with simple coverage written in plain language. Sign up, and you can select the amount of lost rent protection you want.  Get a quote today!