Can Rental Deposit be Turned Into a Profit Center?

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I recently purchased my second property in a condominium complex located in a St. Louis suburb. I am looking for some feedback on whether to require a damage deposit or charge a non-refundable move in fee. 

1. Damage Deposit: Traditional one months rent ($1,000) to be returned at the end of the lease assuming no damage. 

2. Move In Fee: $500 non-refundable move in fee

I am leaning toward option two. Assuming no damage this money becomes profit. It also eliminates the hassle of keeping the damage deposit in a separate account earning almost nothing and returning at the end.  A $500 deductible is very reasonable for a condominium unit with no wind/hail exposure so even if something goes wrong I will have the funds on hand to pay the deductible. Obviously if multiple things go wrong I would have $500 less but I think with careful tenant selection this could end up being much more profitable I am hoping to get feedback from those in the BP community that have experience with both or either of these. I look forward to feedback!

[Marc Phelps]

I have done both.  The problem with taking a non-refundable fee is when your tenant moves out, no matter how great they were when they moved in, they will remember that the 'deposit' is non-refundable and many (if not most) will make a point of trying to stick you for $500.  They won't clean up or they just will leave it out of their last rent payment.  Of course, you can track them down and try to collect your damages if you want.  Just keep in mind that you aren't the only party in the transaction who may find motivation in the 'non-refundable' part of the move-in fee.