Does anyone use Non-Refundable Deposits?

[Nick Macklin]

I heard of someone saying recently that their lease uses non-refundable deposits (really more of a buy-in to use the property for the lease period).  I hadn't heard of this before so I hadn't considered it.  He said over the years he has been brought to court a couple times over it but has won hands down each time.  It seems like a good way to cover tenant placement costs upfront.  I'm not interested in going to court but I was wondering if anyone has personal experience with these and their thoughts on it.  Thanks!

[Patrick Bergin]

Using move in fees is a great way to generate additional income and I personally like it for a couple of reasons. One, it can be a lower barrier to entry for a tenant. For example say the deposit would be equal to one months rent but you make your move in fee half of that, the tenenat only has to layout half of the cash they otherwise would have upon move in. Second reason I like it is because it takes away that question of whether or not the tenant is going to get their deposit back at the end of their lease; the tenant doesn’t have to be thinking about it the entire duration of their lease. Now of course they’re still responsible for any damages and repairs.

That’s interesting he’s been to court over it. I think the key is in the terminology: “fee” vs “non-refundable deposit.”