First, Last and Security is a lot of money??

Question

John Thedford · Answer

I don't get 1st, last, security for a couple of reasons. The last months rent must be held in a segregated account like security deposits and cannot be drawn until due. So, it is a liability sitting there with no financial benefit.  If the tenant leaves early,, you may be required to refund that as well.  Second, between an eviction and damages you will probably be the financial loser. I require the tenants to pay 1st month and a security deposit at least 1.5x the rent. My least expensive unit rents for $995 and I get $1800 SD on that one. Many others rent for $1300-$1600 and deposits range from $2200 to $2400. No complaints from tenants. Good ones, that have ability to pay strong rents, have the money.

BTW--make sure and be familiar with Chapter 83 Part II.

Frank Chin · Answer

I done rentals for many years, and tenants usually expect to pay a months rent, and a months security. In some areas, people ask for last month, and renters pay that as well.

Up in NYC where I am they allow more than a month security so I ask for 1-1/2 month security. And how tenants react to the request is a good indicator of credit worthiness.

If they don't bat an eyelash, say no problem, you're will not have problems with the tenant. If they argue with you and say why so much, or pay the security in installments, these people will always be a month or more beyond.  Its just a given.

The best proof of this is once I was going to rent to a retired couple, and they said the 1-1/2 month is too much, but agreed to it after some argument. They came to the lease signing with only one month, and I asked them to leave.

I then rented to my second choice, whom I told earlier someone beat them to it. I called him and he asked me what happened and I said the other renter couldn't come up with the 1-1/2 month security. This guy said "if that's your problem, I'll give you 3 months security". I hesitated a minute, and said "3 months security and a months rent is too much, 1-1/2 months security is fair".

This second choice is a construction worker and his work is seasonal. He explained since his income is so variable, he saved quite a bit as a reserve to tide him over slow periods. Very good, I thought to myself, and that's the reason he's the second choice, the unsteady income.

So I always watch the reaction of the tenant to requests for the rent and security. How they react to request of 3 months rent, in your case, in the beginning is really best indicator of their finances, even better than credit reports. Both my 1st and 2nd choices above had excellent credit reports.

I owned rentals in MA some time ago, they restrict security deposits to one month, so that's always been first, last and a month's security.

Ryan Murdock · Answer

@Beau Pearson I agree with you that first, last, and security can be a lot for someone to come up with especially considering other moving expenses and the possibility they are waiting on the return of another security deposit from their previous rental. While I still try and get it for all my SFH rentals, on certain occasions I will accept a minimum of first and security but allow them to pay that "last month" in installments - say, an extra $250/mo until it's paid.

I guess it all depends on your market. I know in my area I would alienate some otherwise great tenants if I wasn't at least a little flexible on the "last month rent" requirement.

Brian Garrett · Answer

First, last and security is normal procedure here in South Florida regardless of the rent price.

Bob Okenwa · Answer

Be aware of your state/city/county landlord laws and what you are allowed to charge at move in for a security deposit. In AZ, the limit is 1.5x the rent but I believe FL has no limit as a state, though your county may have one. Maybe you can just ask for 1st month and security deposit.

Mark Elkins · Answer

I agree that if it is customary in the area to get that much then tenants will be prepared for it.  Similarly, in some of my rentals, I don't provide appliances because non-working appliances become a reason to withhold rent or criteria for HUD to suspend payment.  The locals all know the drill and bring their own.

If it's permitted in your area, you may consider the security deposit a fee instead.  This way you won't be expected to return it and just charge the tenant as they go along for damages.

Cara, I saw your post too.  Tell your tenants that the other rentals are charging too much over time which is why they have to give away $99 move-ins just to attract people.  If they were charging fair rent in the first place, they could ask for more, as you do!

I hope this helps!

Matt Nolan · Answer

First, last, and security are expected in this area. I wouldn’t so much as consider a tenant incapable of meeting that criteria.  If they can’t afford it, there are plenty of other apartments out there they can look at.

Thomas S. · Answer

Stay with the local practices.

It is the best screening system you can use. Tenants know what is required of them in the area and should have 1st, last and deposit otherwise they are financially irresponsible and a high risk.

Orita Issartel · Answer

In South Florida, specifically Miami, I always ask for first month rent and 2 months security deposit for my properties and those of my clients. It's actually the norm here. Here's the thing; if the tenant decides to stop paying and we have to evict and on top of it there's damage to the property even with 2 months deposit you'll lose.

Charlie MacPherson · Answer

@Beau Pearson As @Bob Okenwa said, state and local regulations will rule, but here in MA, it's common for tenants to pay first, last, security and in many cases another month to cover commission.

Look at an average $1800/month and they have to cough up $7,200 to move in.

It does seem like a lot, but that's the cost of housing these days.

First, Last and Security is a lot of money??

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