Do you ask for 1st and Last or just deposit?

Question

Looking in our local newspaper at the house rental ads I notice most say the rent amount + deposit. Do any of you require first, last AND deposit. Or just first months rent + deposit? I was telling my husband that asking first, last, plus a deposit may shrink the potential renter pool considerably because of the cost they would need to have up front. He feels that having that last months rent would be better. That way if a tenant moved out without any notice we'd at least have their last months rent. What do you all think?

Mike V. · Answer

Here is my limited experience, I have two SFR one for $850 and one for $1450 that I require 1st, last, security, and pet deposit up front. That definitely knocks a number of prospects out but I have found that those that have that much cash up front tend to be a little more financially secure. So far it hasn't hurt me on vacancies (I have only had 3 days of vacancy in the last couple of years) but I keep both homes in perfect condition, priced competitively and both have been recently rehabbed. When the market picks back up I'm guessing this will be harder and harder to do since those with that much cash will probably be buying not renting but for now it is working for me.

Liz F · Answer

Most tenants barely have for the first month and deposit, so it is difficult to get more.
What I have done with two tenants that had "a checkered financial past" was to make them pay the last month in parts, like $50/month. I tell them how great it will be when they move out, they will have extra cash. The first tenant payed about half the last month's before he started to come up with excuses. The second payed about 1/3 before he too did not have enough.

Jon Klaus · Answer

We are using lease/options.

I'm asking for a large security deposit (2-5% of value) that can be used toward purchase if they exercise the purchase option. I'm also pricing the rent at $50-75 below market and asking the tenants to do minor maintenance.

Yes, this disqualifies many prospects, but helps ensure that I get better and stronger tenants.

Eric Wang · Answer

I only ask for first month and deposit, anything else is asking too much. I never make my rent and deposit the same amount, otherwise, tenants will use their deposit as their last month's rent. I see places offer deposit specials, their just asking for trouble.

Jon Holdman · Answer

Drive the area, write down all the for rent numbers, and give them a call. Check craigslist. Around here, rentals.com also gets a fair bit of advertisting. See what your competition is doing. You'll need to be competitive.

Kel S · Answer

Thanks guys,

See that is what my thoughts were as well. I just don't see people paying first/last and a deposit. There are other rental units they could get without having to do that.

Michael Rossi · Answer

Kel,

Unfortunately, you don't get to decide that anymore than you get to set the rental rate. The market sets the rental rates and what you can get upfront. Don't get me wrong, you can set the rental rate at anything you like and you can ask for first, last, security deposit, pet deposit, etc,etc, etc, but all you'll end up with is a vacant unit and a lot of red ink.

I seriously doubt that you would end up ahead by trying to get first, last, and security deposit in Toledo. That certainly won't work in central Ohio.

Good Luck,

Mike

Harrison Painter · Answer

I agree with Jon. It is difficult enough to get first months rent and full deposit. However, that is our standard. If we tried to get more, our properties would probably sit vacant and it would be counter-productive.

~Harrison Painter

Jon Holdman · Answer

I certainly think it would be better to get first, last, and deposit. Its all I can do to get first month and a deposit. Lots of rentals in my area that are being advertised with small deposits - half a month down to as low as $99.

Do you ask for 1st and Last or just deposit?

Do you ask for 1st and Last or just deposit?

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