Tolstoy wrote: ”Happy families are all alike; every unhappy family is unhappy in its own way.”
This line certainly rings true in today’s rental market as well: Happy renters are alike in that they have few complaints about their living quarters. Unhappy renters, however, have a variety of complaints, from poorly maintained lobbies to noisy neighbors to security deposit refunds that never seem to arrive on time.
In fact, the long wait for security deposit refunds after move-out is considered “very painful” by 15% of renters in a recent Obligo survey, the highest among other common complaints. This issue greatly impairs the renter experience, fueling negative online reviews that dampen the appeal of properties.
It is then imperative for property owners and managers to tackle the problem of ineffective security deposit refunds, if they want to attract and satisfy today’s savvy renters.
How Security Deposit Refunds Are Typically Handled
Let’s take a look at why slow security deposit refunds exist in the first place. When renters wait forever to get their security deposits back, they are quick to blame the landlords. But handling security deposits is not a walk in the park for property owners and managers either. The process of managing security deposits creates a headache for all parties.
When it’s time to refund security deposits to former residents, property managers need to cut paper checks and put them in the mail, which could take weeks to arrive. Despite the varying state-mandated return deadlines – some as tight as 14 days – it’s a challenge to refund all deposits on time because many forwarding addresses are incorrect or unknown, and renters become unresponsive after moving out.
Repeating this process for every unit consumes hours upon hours of administrative time. It not only adds burden to the leasing and accounting teams, but also becomes a full-fledged compliance risk.
Solutions To The Slow Security Deposit Refund Problem
Fortunately, there are ways to accelerate the security deposit refund process and create a better overall experience for residents and landlords alike.
1. Easily refund your security deposits electronically
Refunding security deposits electronically through a seamless platform provides a significant advantage over mailing paper checks, which is often delayed by unknown forwarding addresses or uncashed checks.
Obligo’s Electronic Deposit Refund solution is here to help accelerate the refund process and simplify the move-out experience. Fully integrated with the leading property management software systems, this solution will make chasing down renters a thing of the past. It matches existing move-out accounting workflows to automatically process deductions and engage with renters until their deposit return is reconciled. Funds are pulled directly from the landlord’s existing account structure, ensuring that the process is timely and compliant.
It’s easy for renters too: they can use Obligo’s secure workflow to verify their identity, connect a bank account, and receive confirmation upon successful funds transfer. In the event of damages or other move-out charges, the platform helps landlords remain compliant by providing all the necessary disclosures to renters, including information about how to dispute unreasonable charges in accordance with the lease agreement and local laws.
2. Offer your residents deposit-free living
Another effective solution is not taking a security deposit at all, eliminating this pain point at its source. Deposit-free properties are quicker to lease, easier to manage, and more attractive to residents. Over 50% of participants in Obligo’s survey said not having to pay a security deposit will “greatly impact” their decision when looking for a new home.
Adopting deposit-free technology will also boost resident retention rate. The highest ranking amenity to influence residents’ lease renewals is getting their deposit back upon renewal, according to the survey.
Prospective renters today have powerful tools at their disposal to compare apartments and make calculated renting decisions – sophisticated landlords have been looking for the most cost-effective “amenity package” for this reason. Deposit-free living stands out as a great choice because it frees up cash that would otherwise be tied up for renters, and unburdens landlords from the hassle of managing deposits.
Many property owners and managers are already saving countless hours of administrative time with Obligo’s deposit-free technology, which keeps them secure and their tenants accountable. At properties that offer Obligo, over 70% of renters choose to live deposit-free.
Obligo now fully supports move-ins and move-outs for all renters, whether they use Obligo’s deposit-free service or pay a traditional deposit. Schedule a demo today to learn how our holistic suite of deposit solutions can power a better experience for your residents!