Inherited Tenants - Low security deposit - how to proceed?

[Chris F.]

Hi all,

I recently purchased a 2 family property, and one of the units was occupied by tenants who have been there around 10 years, and have always paid the rent on time. They were on an annual lease all years prior, but went month to month since their previous lease expired about a month before closing. They pay $2200/mos, but I just found out they only had $600 for a security deposit. When I brought up the idea of raising that to $2200 to match the rent, the tenants said they can't afford that. I think they are just negotiating, but can't know for sure.

They seem like good tenants who are low risk for causing damage, but I'm definitely taking on some level of risk with a low security deposit. I want to put them on an annual lease (and they would prefer that as well), and was thinking of countering with a higher rent to offset the risk I'm taking for the low security deposit. Does that seem reasonable?

I'm curious what approach others recommend.

Thanks!