How Much of a Security Deposit Can I Charge on My New Rental?
If the property is returned in the same condition (that is, clean & undamaged), the security deposit is returned to the tenant. If however the apartment is damaged or items are missing, the landlord can use these funds to repair any damage that has been caused during the tenancy.
Security deposits are more than a way to offset any possible damage. A security deposit also means that your renter will be more inclined to finish out his lease.
How much security deposit can I charge?
I recently advertised one of my upscale patio homes for lease a few weeks ago, and had an applicant comment on the security deposit as being "too high" for the property. He was wrong of course, but it did get me wondering what the standards were for security deposits and what other landlords were charging. Here's what I found:
According to Real-estate-law.freeadvice.com, security deposits are determined by state law. About half the states have no limits, while others limit the amount to an equivalent of one to two months rent. Certain states will allow a renter to charge a higher security deposit if the apartment is furnished or if the tenant owns something that can cause damage.
What seems to be an average security deposit average amount nationally is the equivalent of one month's rent. This is what I charge on all of my rentals which is refunded if the rentals are left clean, undamaged, and intact (normal wear and tear excepted).
When it comes to determining a reasonable security deposit for your rental, the equivalent of one months rent is a great starting point. If however, you plan on charging more, it's best to check the landlord tenant laws of your state first.
More by this contributor:
Should I buy the rental house next door?
Landlord rental utility agreements & how they work
How to plan for an upcoming vacancy.
resources:
http://real-estate-law.freeadvice.com/landlord_tenant/security_deposit_how_much.htm
http://www.legalmatch.com/law-library/article/security-deposit-laws.html
Published by C. Jeanne Heida - Featured Contributor in Business & Finance
Jeanne is a small business owner with 25 years experience in the real estate industry. A consistent Y!CN Top 100 writer, her articles can be found at Y!Finance, Shine, Your Wisdom, DEX, and the Scripps Net... View profile
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5 Comments
Post a CommentOh,.. this is good to know, thank you for a great post!
Thanks for the info... I always requested a half month's rent, just to ease the financial burdens of moving. Only had an issue with one tenant over 5 years. Got lucky I guess.
I've never balked about a security deposit - the landlord has every right to charge at least one month's rent. I always got it back in the end :) cheers!
We used to rent a lot (we moved often) and one month was the standard.
We had a bad experience one time. We didn't get out deposit back even though there was zero damage and the house was left spotless. The landlord admitted that he had spent the money (instead of putting it in a special account like he was supposed to). Our only option though, was to sue, and we were moving from Michigan to California. So the he got to keep our $1200.