Extra Sec Dep (by S i d [MO]) Feb 11, 2019 5:25 AM|
Extra Sec Dep (by WMH [NC]) Feb 11, 2019 5:41 AM
Extra Sec Dep (by Sisco [MO]) Feb 11, 2019 5:49 AM
Extra Sec Dep (by Roy [AL]) Feb 11, 2019 5:53 AM
Extra Sec Dep (by S i d [MO]) Feb 11, 2019 6:28 AM
Extra Sec Dep (by Robin [WI]) Feb 11, 2019 6:49 AM
Extra Sec Dep (by JB [OR]) Feb 11, 2019 8:33 AM
Extra Sec Dep (by 6x6 [TN]) Feb 11, 2019 8:41 AM
Extra Sec Dep (by WMH [NC]) Feb 11, 2019 9:13 AM
Extra Sec Dep (by 6x6 [TN]) Feb 11, 2019 9:40 AM
Extra Sec Dep (by Robert J [CA]) Feb 11, 2019 9:56 AM
Extra Sec Dep (by LordZen [MA]) Feb 11, 2019 6:45 PM
Extra Sec Dep (by Lynn [MA]) Feb 12, 2019 3:59 PM
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Extra Sec Dep (by S i d [MO]) Posted on: Feb 11, 2019 5:25 AM
I hope this will generate some interesting discussion.
My experience with collecting an extra security deposit is I have only seen a very small number of instances where it works. I will only take an applicant with increased security deposit if they lack any reference in one of my 4 keys areas (Income, Rental History, Credit, Criminal Background).
A few examples of things I think can be "fixed" by an increased security deposit:
1) New renters who have never rented before. Yes.
2) Someone young with indeterminable credit report (no debts). Yes.
In short, nothing BAD has happened: they just haven't been out in the world long enough to establish a record. If everything else looks GREAT, I will take them with an increased security deposit.
The opposite of those examples, things that cannot be fixed with an extra deposit:
1) Poor land lord history / eviction with unpaid judgment. No.
2) Poor credit due to late pays, charge offs, and collections. No.
3) Pattern of run-ins with the law. No.
4) Sporadic income / job hoppers (moves every year) / on the current job less than 90 days / self-employed / "cash under the table" income. No.
Here's the logic behind this policy. My units are Class C that rent in the $550 - $600 range. The max my state allows is 2x the rent--that is $1,200. If I have to evict I typically lose:
1) 1-2 month's rent for the eviction process & turnover time.
2) Cost of damages and cleaning.
3) Unpaid late fees.
4) Legal fees.
This usually adds up to more than the amount of the deposit I can legally collect. So really, the question is will I take a person with proven bad references and not be able to break even if/when the worst happens? I've tried it before and been burned every time. I won't accept a double security deposit as a solution because it's simply not enough and the risk is too great that bad behavior will repeat itself.
Side note: a law the state made (i.e. greedy land lord can't charge more than 2x the security) to protect tenants actually HURTS tenants with a bad past because there's no way I will rent to them. Now if the state would let me collect 4x the security.... (*wink) Most tenants wouldn't have that anyway, so it's kind of a non-issue. But still, some might be able to swing it at tax time. Regardless....
In summary, an extra security deposit fixes NEUTRAL references, but it does not fix NEGATIVE references.
What is your policy on when/if to use an extra security deposit? --173.20.xxx.xxx
Extra Sec Dep (by WMH [NC]) Posted on: Feb 11, 2019 5:41 AM
I don't rent to people with eviction history, bad landlord history or patterns of run-ins with the law anymore. Extra deposit would in no way increase my wanting to do so. Life's too short - Not worth the angst and the stress.
I have raised my deposit for everyone these days though. From originally equal to rent to rent + 200 to rent + 250 and these days it's up to rent + 300. I can legally charge rent x2 but I don't need to do that and I don't want to keep that much of someone's money.
Rent + $300 is working, no one balks at it. --50.82.xxx.xx
Extra Sec Dep (by Sisco [MO]) Posted on: Feb 11, 2019 5:49 AM
I don't use the double security deposit method, if the prospects are young and have no track record, but EVERYTHING else checks out including the in home inspection, I proceed. But...no track record and any other issue.....ANY other issue, then I decline.
I think that the double deposit risks losing the good prospects.
The entire security deposit system is set up for very small monetary reimbursements, it is completely unsuitable for any significant non payment/damages......therefore, I must have tenants who are easily garnishible.
Screening and tenant selection are where the Landlording game is won or lost. --72.172.xxx.xx
Extra Sec Dep (by Roy [AL]) Posted on: Feb 11, 2019 5:53 AM
My state does not allow more than one month's rent to be collected as a security deposit.
When you collect 2X SD, plus 1st month's rent,...do your new tenants have any money left over to get utilities turned on their names? Also, does it make any difference to you if your new tenants are broke and have to borrow their total move-in funds? --68.63.xxx.xxx
Extra Sec Dep (by S i d [MO]) Posted on: Feb 11, 2019 6:28 AM
WMH, sounds like we do things about the same.
Sisco, yep, mostly the same... I've gone 100% garnisheable tenants, and increased the quality of the job requirement. No more "McJobs."
Roy, no problems. If they want the place they get the money, or else they wouldn't be able to move in. Like Brad, we have some on PayDay plan, so 2x security + 2 weeks rent. You might wonder, "Well what's the difference in that vs. just collecting 1 month's rent and 150% deposit?" Good question. I suppose in the end the amount of money is the same, but for tenants it must somehow work out differently psychologically because every time I've tried it this way it has actually worked. The timeline until the next 2 week rent installment is short, and all of their other references are good, so every time I have done this I've gotten paid and had multiple year tenant. Maybe it's the paying in small chunks that helps them manage the money and get used to paying vs. collecting the whole pile up front and then waiting 30 days. I do not have a great answer for you on this other than it appears to work.
I can't stress enough that like Sisco says, "everything else much check out good!" Double deposit isn't for sketchy people. It's for those with a blank slate in one area and good stuff in all other areas. --173.20.xxx.xxx
Extra Sec Dep (by Robin [WI]) Posted on: Feb 11, 2019 6:49 AM
I've offered this a couple of times to people who would qualify IF the information they couldn't verify was actually true (income from moonlighting, about to start a job, plenty of money in the bank). Only once did they take me up on it.
The one time we did this was with some Nepali refugees who had just moved here from AZ. They didn't have jobs yet, but had very solid work history in AZ. The kinds of jobs they were looking for were abundant in our area. With the strong family network they have, they didn't blink at providing a double deposit. We put a clause in the lease that we'd give half of it back after one year of on-time payments and evidence of a good work history.
We haven't given it back, although they met the criteria, because they're buying the house next week! We'll just roll it into the HUD. --204.210.xxx.xxx
Extra Sec Dep (by JB [OR]) Posted on: Feb 11, 2019 8:33 AM
Instead of asking for a pet deposit I have been asking for a higher SD instead. This allows me to use those funds for any shortfall or damage they have without regard to whether or not I can show that it was from their animal(s). --24.20.xxx.xxx
Extra Sec Dep (by 6x6 [TN]) Posted on: Feb 11, 2019 8:41 AM
The couple I am about to rent to are college grads and do not have a lot of history but otherwise seem good. I am getting sd plus first six months rent up front. --73.120.xx.xxx
Extra Sec Dep (by WMH [NC]) Posted on: Feb 11, 2019 9:13 AM
We don't charge a pet deposit. We charge pet RENT at $25 per month.
I don't mind being someone's first landlord, 6x6. If they are otherwise good, they are also trainable! --50.82.xxx.xx
Extra Sec Dep (by 6x6 [TN]) Posted on: Feb 11, 2019 9:40 AM
Thank you WMH --73.120.xx.xxx
Extra Sec Dep (by Robert J [CA]) Posted on: Feb 11, 2019 9:56 AM
Here in Los Angeles a landlord can only collect 2 times a rent as a deposit if the unit is unfurnished. If there in furniture in most of the rooms, a landlord may collect 3 times the rent as a deposit. So I have storage rooms with tenants left over furniture.
When I get an applicant who really wants my rental, and this happens a lot because I provide quality products at good prices, I'll put inside the unit some furniture and then ask for 3 x rent for a deposit.
This works well. After 1 year of on time payments, I will credit some of the deposit to be used as the next months rent. I will also allow the tenant to dispose of the unwanted furniture -- it has no real value. --47.156.xx.xx
Extra Sec Dep (by LordZen [MA]) Posted on: Feb 11, 2019 6:45 PM
SID good posting!! It's a shame here in MA we can collect more than one month worth of rent for a deposit!! --73.159.xxx.xxx
Extra Sec Dep (by Lynn [MA]) Posted on: Feb 12, 2019 3:59 PM
in MA you are only allowed to collect, first month, last month, security deposit and key deposit nothing more than that, no pet deposits or any other deposits --168.88.xx.x
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