Security deposits - Can you have a security dep incentive?

[Michael Strobel]

Hey BP,

So I was thinking lately about ways to lower costs when dealing with tenant turnover. When a tenant decides to move out, I was wondering if anyone has thought about rewarding tenants when they move out if the unit is turned over in great condition. Obviously, normal wear and tear (minor floor scuffs, paint etc) would not come into consideration. But my thought is if an owner offers a 20% bonus of the tenants security deposit that could increase their potential that they would take better care of the unit. Say if they stay for 2 years and the unit was returned in great condition maybe give a 30% bonus. These are just ideas.  I realize it would need to have to be pretty defined as to what normal wear and tear would be considered as but has anyone ever employed this strategy before? Any success? Or complete failure?

[Alex Deacon]

@Michael Strobel I think the best practice is to qualify your tenants carefully and offer a good product in a good area. You will then have less issues with any security deposits. Incentives in my opinion are not needed. We manage 650 units in the Pittsburgh area and we dont offer anything other then the prompt return of the deposit if the property is left in acceptable condition.