Do you collect additional security deposit as you raise rent?

Question

The security deposit is most typically equal to a months rent. As tenants renew their lease and the rent increases are you collecting additional security deposit as well?

Kristina Heimstaedt · Answer

@Adam M. I live here and know the market pretty thoroughly. We typically target millennials who are more than likely to be buyers some day. Because they fit this profile, more often than not, it is not their agenda to be professional tenants. I also like to respond to situations by presenting tenants with the following:

1. the law

2. how we operate

3. the bro deal that I'm willing to offer

Overall, we have a great product. Our tenants rent from us for that reason. However, they stay because we are great landlords. I had a tenant move out of state for about a year or two, but when she was looking to come back, she texted me first and I was able to place her in another unit when she came back. That's pretty typical for us or we hear from prior tenants who have boyfriends/girlfriends looking to move to the area. I think the combination of great products and excellent service make it pretty easy to operate in California.

We've had a few challenges, but we've learned how to do a pretty solid job of screening them out.

Paul Bowers · Answer

I'd never given it any thought or heard of anyone doing it but was reading through the NY state landlord/tenant laws and saw that it was allowable. Seems like it would be a pain to keep track of over a long term lease with virtually no benefit to the landlord. I was just curious if I was missing out on a good reason to do it.

Redgy Saint-Germain · Answer

@Paul Bowers I dont think its worth it unless you're increasing your rent by 100$

Redgy

Thomas S. · Answer

Check with your state landlord tenant regulations. In some states it is not allowed.

Because most states do not allow a landlord to legally use a security deposit to cover unpaid rent the amount of the deposit has no direct coloration to the monthly rent and therefore there is no reason to have the amounts the same.

Adam M. · Answer

@Kristina Heimstaedt I would hate being a landlord in CA...how do you do it? :)

Kristina Heimstaedt · Answer

I ask that tenants pay about 125% of rent in the form of security deposit. I have had a tenant not pay last months rent and trash a property. In California, it is illegal to ask for first, last and security deposit, so the 125% typically protects against that and some slight rent increases.

JD Martin · Answer

We don't. It's a low reward high risk play to me. Assuming the tenants are good - you haven't asked them to leave for damaging your place - you are then telling the tenant "I believe you're going to damage my place, and I intend to keep some/all of this deposit, so I want you to make up the $25/50/75 shortfall". Most of the time rent increases come at the end of a lease, or with some notice on month to month, and I would assume you know the condition of the property at that time.

Anthony Hurlburt · Answer

I've never heard of anybody collecting more security deposit with rental rate increase.

Jessica Zolotorofe · Answer

You are entitled to, but most don't. It's more of a pain for the few dollars than it's usually worth.

Do you collect additional security deposit as you raise rent?

Do you collect additional security deposit as you raise rent?

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