holding deposit... what if applicant backs out? (Indiana)

[Nathan Williams]

I usually require half of the deposit for a tenant to reserve a unit for up to 3 weeks.  I was curious, what if the person backs out and never moves in?  Do I have grounds to keep that deposit?

Thanks 

[Nathan Gesner]

I think you're too generous.

I require a holding deposit equal to one month of rent. I typically won't hold a vacant property for more than seven days for them (up to 14 days in a slower market/season). After that, I expect them to start paying rent and utilities. I'm negotiable on things like lawncare if the home will sit empty and needs to be mowed, but it depends on the situation.

If they fail to start renting on the agreed date, then I terminate their agreement and they forfeit the holding deposit completely. I then market the rental and start again.

If you take half a deposit but only hold it for three weeks, you'll be at least one week behind on rent income before they even cancel. Then you have to spend another 1-4 weeks looking for a new renter which means that one renter is probably costing you at least half a month of lost rent.