Security Deposits

[Patrick Allen]

Hey all,

Soon to be landlord (to roommates not tenants, but I'm applying the same principles) trying to get all my ducks in a row for two December move-ins to the house I have under contract.

I am to the process where I need to intelligently quote rent and security deposits to my roommates. Rent is coming together nicely as I get a 10,000 foot view of all my monthly expenses, but how much to charge for the security deposit isn't so apparent. Living in apartments over the years, I have moved in with no security deposits, deposits equal to first month's rent, deposits of greater than first month's rent and deposits that seem to be quoted out of nowhere. I don't want to penalize my tenants, particularly because we will be living together open air and I will know precisely who damages what and in what way, so I'm taking it to the forums.

Should the security deposit be:

- 1 month's rent?

- a certain amount (e.g. 1 month) of mortgage payments?

- a certain amount of expenses not including mortgage?

- a nice round figure that seemingly would cover routine damage (e.g. $500)?

I would love a reason-based approach to it.

[Darren Sager]

I'd never take less security deposit than what the state allows.  Always take the maximum allowed by law and don't co-mingle funds with anything else.  Set up separate accounts for all.  Always best in my opinion for smaller rentals.