How many of you ask for a damage deposit?
How much is the right amount?
When do you get it? With your monthly deposits? before? After?
How many of you do a pre-inspection? Do you find it makes a difference?
We require security deposits. We do not call them damage deposits, pet deposits, utility deposits, or anything else. If it is called a security deposit, we can use it for any number of scenarios upon move-out, such as unpaid rent, unpaid utilities, unpaid fees, missing items and damages.
We set a base amount for each unit, depending on the size and type of unit. If we accept a tenant who is greater risk, we will require an additional security deposit, which we explain up front in our rental criteria.
Some jurisdictions restrict the amount and manner in which you can obtain a security deposit or other deposits, and under which circumstances the landlord can retain some or all of the deposit after the tenant vacates the unit. It is imperative to check the landlord-tenant laws for the jurisdiction of the rental property.
We collect the security deposit upon signing of the lease/rental agreement and do the move-in condition property inspection report before we hand over the keys.
@Jamie Montpellier I see you are from Canada. I know they have some different laws about landlord/tenant relationships. There are also some terms that may differ from the states as well.
Typically the markets sets the amounts and times of collection. In my case it's customary to get the equivalent of 1 months rent for a security deposit and we collect it at the signing of the lease. There are some that charge 2x a months rent for the security deposit. Some charge $400 for a security deposit. Those that charge 2x have units that sit vacant longer but tend to have few cases of tenants leaving them owing money. Those that charge $400 for the SD rent their units faster and tend to end up chasing tenants for damages/lost rent through the court system.
Be aware that there laws related to security deposits and in some states here there are limits on the amount of security deposit a landlord can collect. Do some searching in your location and see what your local laws are about these issues. Call some local landlords and see what their policy is on security deposits. Call the big box apartment complexes to see what the really high power folks are doing. I have found the big box places tend to be low on the amount of SD they require.
In Ontario, we are not permitted to collect more than the last month's rent as a deposit. And then that has to be used as the last month's rent when the tenancy ends. If there is damage you have to collect that separately.
There is also a government brochure that has to be handed out with the lease which sets out some of the more common landlord and tenant rights and responsibilities.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing