Security Deposit Only $200?

Question

The apartment complexes near my units are only asking approx. $200 security deposit.   I am asking minimum one month's rent.  Can anyone explain to me why/how are they able to keep their security deposits so low without ending up with a lot of tenant issues?

Account Closed · Answer

@James Farrel Go find the property manager and ask what they're doing, and then come share it with the rest of us!

James Farrel · Answer

These are actually UDR Apartments in a pretty nice area of Columbia, MD.  At the moment they have only one vacancy out of more than 200 units.

It was brought to my attention by my newest tenant that minimal security deposits are actually common through out our area which surprised her (and me).   It actually made her a bit suspicious until she saw how common it was.

Unfortunately, I have been to landlord court  quite  a few times and there are dozens of eviction hearings in our county every week.  I do see the point that if you are going to lose money on an eviction which may cost 3 months or possibly more of lost rent, keeping one month security deposit would not begin to cover it.

Jeff B. · Answer

Check State regs: in Calif, we are limited to 1st+last OR 1st+deposit which can not exceed 2x the rent.

Deposit should always be greater than the rent!  Why?  This stops move-outs from not paying the last month and claiming 'take it from the deposit' - - bad idea - - there's nothing to take for any damages!

Deposits of $200 lead me to see this as a Class C or D property and it has problems with vacancies - - watch the neighborhood for the concession, "Move In for $1.00"

Michele Fischer · Answer

Our PM doesn't charge very high deposits and doesn't prevent move in if they can't come up with the deposit.  It drives me crazy, but in reality our tenants usually owe us nothing or owe us 2 or 3x rent at move out.  So one month deposit is either not needed or doesn't begin to cover losses.  By moving people in faster, that helps offset the lower deposits.  Personally my stress level is lower with higher deposits though.

James Farrel · Answer

I guess they are willing to eat the losses on an eviction including the security deposit "deficiency?"  I have not analyzed their rents, but I suppose it is possible they calculated that they are able to charge higher monthly rent to applicants that cannot afford a full month's security deposit elsewhere.  I know they do have evictions, but I do not know how many.

Prior to last year, MD landlords were required to pay 3% interest on deposits (now 1.5%) so that may have been part of the reason why they stopped collecting larger security deposits.   Try getting 3% interest on your security deposits in escrow.

James Farrel · Answer

They have virtually no vacancies and to my knowledge they do not charge any move-in or cleaning fees or collect last month's rent.

Steve Nowak · Answer

How is the rental market there?  Maybe low security deposits are a way to attract more tenants.  Or, maybe the landlords make up for in in other ways, such as move-in and/or cleaning fees, last month's rent, etc.

Security Deposit Only $200?

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