Security deposit charge
May 18, 2011 8:35 PM   Subscribe

Security deposit to charge in a poorer neighborhood?

I'm renting a small home with yard for $585/month (the going rate) in a fairly low class neighborhood. I lived in the home but am now moving and going to rent it. I know that one month's rent is typical, but does this change at all in a poorer neighborhood? Or is one month still typical?
posted by Salvatorparadise to Work & Money (16 answers total)
Typical, as far as I know, and may even be the law in some places.
posted by phunniemee at 8:39 PM on May 18, 2011

Not sure what a poor neighborhood has to do with it, but the last two times I rented a place I paid first month's rent, last month's rent, plus a month's rent as security deposit before moving in.
posted by headnsouth at 8:39 PM on May 18, 2011

I've looked for apartments in a variety of neighborhoods in the midwest, including some fairly low income neighborhoods, and one month's rent plus occasionally a small cleaning deposit was standard everywhere.
posted by Meg_Murry at 8:44 PM on May 18, 2011

My security deposit was $200 for a rent that is significantly higher (over $1000).
posted by Monday at 8:55 PM on May 18, 2011

Response by poster: thanks for the answers, this helps
posted by Salvatorparadise at 9:25 PM on May 18, 2011

My parent's have rentals and they mentioned to me that they stopped charging the same amount for a security deposit as rent, so the renters would not be able to (even though the lease specifies) use it as the last month's rent. They either charge a little more or a little less.
posted by blackkar at 9:27 PM on May 18, 2011

First and Last is typical in Toronto, but is a big impidiment for low income folks--so perhaps some finicial justice, you might erase that
posted by PinkMoose at 9:47 PM on May 18, 2011

The financial reasons for charging below or above one month's rent are as follows - check with your local jurisdiction on legality, in CA it's 2 months rent maximum of deposit....

- If you charge an increased deposit, this is your best insurance against renting to flakes and folks who won't take care of your property. If the property is nice, folks who can afford it (and likely won't flake on the rent and/or cause damage) can afford an "expensive" deposit.

- If someone has super bad credit/rental history - this is a reason to require the max deposit for your jurisdiction

- If the unit is super nice and has nice fixtures - you want to be able to afford repair/replacement if the deal goes south.

- You ONLY charge a lesser deposit if your property is crappy, if you are desperate for a tenant, or if you don't intend to be a good landlord.

In my many many years in the rental business, I've never charged below one month's rent. I've only charged at one month's rent when desperate. Charging below one month's rent (even if that is common for your area, and yes, I've been in this position) will insure you get a tenant who damages your property or can't pay rent on time - or at all.

I won't even end this with "YMMV" - because it won't. That's how sure I am of this formula.

A quality tenant worth renting to feels paying 1.5 of monthly rate is appropriate. Especially for a house.
posted by jbenben at 10:07 PM on May 18, 2011 [2 favorites]

It depends on jurisdiction. In British Columbia, you are only allowed to charge 1/2 months rent as a security deposit. If pets are allowed, you are allowed to charge an additional half months rent as a pet deposit. That, and the first month rent is all a renter is ever required to pay upfront; landlords can't even legally ask for last months rent. Just about everybody pays this and exactly this, whether renting in Shaunessy (a high end neighborhood) or the downtown east side (Canada's poorest postal code.)
posted by cgg at 10:57 PM on May 18, 2011

As a person with children who once owned a house, and lost it to foreclosure and now rents, I would say the best way to rent a property is to let the tenant pay out the deposit over a few 2-week cycles. (most people are on 26 pay periods, so pay no longer follows 1st-15th cycles anymore)

If you were really cool and understanding you would divide the year's rent over 26 pay periods and have them transfer the rent into your account every two weeks. Open an account where they bank so the transfers happen immediately and they will never be late.

I don't know, the world is fucked up these days and it seems that no one has any money. You are going to have to be flexible and creative if you want to your property to go to decent people that can pay on time. That and landowners can be so ridiculously crass. Doubly so for property managers. (says the person who worked as contract landscaper for a property management company for six months making good money off poor people's deposits when they left over stupidly terse interpretations of the lease that could have been passed over).

I'm probably going to rub people the wrong way over my opinion regarding this, so I am going to leave it at this comment and bow out.
posted by roboton666 at 11:54 PM on May 18, 2011 [3 favorites]

As a counterpoint to jbenben's rather assertive post, allow me to note that I have on various occasions rented houses and apartments for which the deposit was less than a month's rent, and I have not felt it necessary to damage the property as a result. In fact, I have even tended to pay my rent on time. I would make so bold as to say I have, at least once or twice, been a decent tenant, even when not actually asked to pay more than one month's rent (plus pet fees, if any) as a deposit. Perhaps my husband and I are in fact the only case in which your mileage might vary. I suspect, however, that different areas have different norms.

In places I've lived, it tends to be one month's rent plus applicable pet fees. Sometimes less, but it's not all that common.
posted by Because at 12:25 AM on May 19, 2011 [5 favorites]

I suspect this really depends on the area, but here in NYC I've always seen at least one month's rent for the deposit.
posted by the young rope-rider at 3:27 AM on May 19, 2011

I agree with Because. To find good tenants, referrals are more important than requiring a large deposit.

To answer the question directly, though, one month's rent is perfectly normal. (Though I should qualify, like the young rope-rider, that this may be location-specific. My experience is limited to NYC, St Louis, and a couple southern towns.)
posted by torticat at 5:04 AM on May 19, 2011

I'm used to the security deposit being equal to 1 months rent and being required to pay first & last months rent + the deposit before moving in.

When checking references on potential tenants, make sure to call at least 2 (preferably 3) landlords back...not just their current landlord. This avoids the problem of a false positive reference because they want to get rid of a horrible tenant.
posted by victoriab at 6:20 AM on May 19, 2011

In LA my security deposit was $500 (plus $300 per pet) and that was for a $2000 a month apartment. In Austin it was around $600 plus $200 per pet. In Cambridge (UK) it was one month's rent (which had to be placed in an interest bearing account with a third party) and Helsinki was about a half a month, neither one had additional pet deposits.

The idea of having to cough up first and last month's rent plus an additional security deposit in order to move in is ludicrous.
posted by ValkoSipuliSuola at 7:41 AM on May 19, 2011

Like Because, I have lived in places with no/low security deposit and not felt the need to damage the property. HOWEVER, I (an awesome tenant, if I do say so) am reluctant to rent from landlords who advertise things like "no credit check/deposit/references necessary," because it strikes me as desperate and makes me think either the place or the landlord is probably terrible. So I think jbenben is probably right that low deposits attract crappy tenants; certainly they can scare good tenants off.

Anyway, I think you should ask around, find out what other landlords in your area are charging for security deposits (since these things do vary by region and neighborhood), and go for the higher end rather than the lower end. People who've got their act together will find a way to make it work. And be a good landlord! That's the only way to keep good tenants once you find them.
posted by mskyle at 7:55 AM on May 19, 2011 [2 favorites]

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