AIM 2025: No More Business as Usual

No More Business as Usual: Adapting to Dynamic Deposit Strategies 

Stacy Stemen opened the session with levity, but quickly got to the heart of the matter: deposits are no longer a background process—they're a frontline issue impacting resident experience, operational efficiency, and financial outcomes. Joined by David Walther, Melissa Bartolucci Delgado, and Mark Stringer, the panel explored why deposit strategy needs a serious overhaul.

All three leaders agreed: today’s deposit practices aren’t keeping up. Across their combined portfolios of nearly half a million units, the same pattern persists—deposits are shrinking while move-out costs, evictions, and damages are climbing. Yet many owners and operators aren’t tracking the delta. “We're making decisions based on what competitors are doing,” Walther said, “not on what our actual losses are.”

One major issue is that deposits aren’t prioritized operationally. On-site teams are juggling countless responsibilities, and handling refunds or trust accounts often falls low on the list. But a missed step—especially in a high-compliance state—can create significant problems. “A $500 refund can take hours of coordination,” said Walther, “and lead to a PR headache if mishandled.”

Stringer pointed out that site staff often feel caught between cost-conscious residents and asset-protection demands. “We want to minimize move-in friction,” he said, “but when deposits don’t cover damages, the financial burden hits owners hard.” And since many owners are focused on occupancy and rent growth, deposit optimization often gets overlooked—until it becomes a liability.

Delgado emphasized that residents today expect more transparency than ever. She shared how her sister experienced fee confusion after a management transition—only discovering new charges after being directed to the website. “Residents are asking more questions,” she said. “They expect clarity.”

Regulations add another layer of complexity. With operations across more than 40 states, Walther described the burden of managing varying rules on interest payments, refund timelines, and trust banking. “It’s nearly impossible to automate when every state has a different requirement,” he said. That leaves operators relying heavily on manual oversight, increasing the risk of errors and delays.

And when things go wrong, residents are quick to talk about it online. Negative reviews about cleaning charges, withheld funds, or unclear deductions are common. Delgado and Stringer agreed: the problem isn’t always the fee—it’s the communication. Residents need expectations clearly set at move-in, not discovered at move-out.

Despite the challenges, the panel shared promising solutions. Tides Equities is rolling out Deposit Cloud to automate refunds, ensure compliance, and reduce the administrative burden on site teams. Avenue 5 is exploring similar tools to streamline the move-out process, track unclaimed funds, and eliminate paper checks. With over 10,000 move-outs a month, Stringer noted, “We can’t keep doing this manually.”

Alternative deposit options, like surety bonds from Jetty or Rhino, offer flexibility for residents but come with trade-offs. Walther explained that while they reduce upfront costs and can improve leasing velocity, they create parallel systems that are harder to manage. “You still have to track the 70% who paid a traditional deposit,” he said. “It adds complexity unless it’s all integrated.”

The group called on owners to lead change by treating deposits as a financial KPI. Delgado argued that understanding average damages, bad debt, and actual deposit recovery is essential—especially in today’s economy. “We're not tracking it, and it's costing us,” she said.

The conversation also touched on the role of vendors. Walther told a story about a supplier whose legal team hadn’t updated their lease documents for Texas in two years—putting the operator at risk. “We can’t assume vendors are doing their due diligence,” he said. “We have to ask tough questions.”

Stemen asked whether a centralized legislative resource exists for deposits. Unfortunately, the answer was no. Most operators rely on legal counsel, compliance teams, and third-party subscriptions. Delgado suggested vendors should be doing more to educate clients and ensure their platforms align with state laws.

As the session wound down, the panel agreed on one key message: now is the time to act. “You don’t have to go from $500 to $1,500 overnight,” said Walther. “But small, incremental changes can protect assets and align expectations.” Raising deposits in line with rising risk isn’t about gouging residents—it’s about sustainability.

In one of the final comments, Stringer offered a reminder that resonated across the room: “In an up market, you forget to worry about deposits. But in a downturn, not having enough coverage becomes a real problem.”

The session closed with a light joke about everyone agreeing to raise deposits by $200—but beneath the humor was a serious point. Deposits are no longer just about move-in logistics. They’re financial guardrails, resident trust indicators, and reputation drivers.

Residents are watching closely. And if we’re not listening—and adapting—we’ll feel the cost in ways we can’t afford.