Adjusting Security deposit with increasing rent

[Al Pat]

Here is a question for my fellow investors. Several of my tenants are in my rental houses for now over four or five years. I was able increase their rent over time but it is still about $150 or so below market. I am okay with it given the fact, no additional funds were invested to upgrade the properties over this time (i.e carpet, paint, etc.). However, their security deposit is what they paid when they first moved in and it is now way lower than their current rent. For example house rent is $1100 but security deposit is $875. How do you handle that, do you charge one time security fee adjustment at renewal? what is the best way to handle it or just leave it alone given the fact they have been there for five years now? Any insight would be helpful. They have taken good care of properties and never had any late payment in five years, which makes me want to leave it alone but need someone to second the motion :)

[Mike Dymski]

I'd leave it be.  A five year resident is less of a "security" risk now.  You have bigger problems leaving the rent so far below market.  It's hard enough as it is to make money in real estate without subsidizing someone's housing cost to that extent over long periods of time.