I am looking at a 4 flat where the seller does not have any security deposits.  Instead he collects a move-in fee and move out fee.  Anybody familiar with this method/  I understand the fact its a fee versus a refundable deposit.  I would like to hear the advantage and disadvantage of the fees v deposit.     

@Kenneth Garrett The move in fee is increasingly popular in the City of Chicago because of its punishing CLTO and the potential penalties for not following the rules re: security deposits.

I personally like a move-in fee (at half-month's rent) because it guarantees me $ for things like repainting and minor repairs between tenants that wouldn't otherwise be able to be deducted from the security deposit but always need done.

Downside is it is less money in your possession if something major happens. However, if something major happens and the tenant is collectable, that move-in fee can be used for legal fees to pursue damages. I do make clear that the move in fee is not a replacement for the security deposit and if unit is damaged they'll owe me for those separately. 

@Matthew Olszak

Thanks for the update.  I'm not sure if I like it v a security deposit, but I understand it.

I personally like security deposit, most of my tenant doing really good and majority of them are getting their deposit back. 

So it is not fair to charge someone who maintain your property the same amount with others who doesn't. 

Also I think if they know they getting their money back they usually tries harder. 

@Kenneth Garrett @Matthew Olszak @Dewi Warmus A few years back we found ourselves giving 100% of the security deposit back because we were afraid tenants would get an attorney(free to tenant) over a few hundred dollars. Everyone feels the same way at first but when you end up in court or the threat of court you will change your mind quick. Once your lease ends up in one of the free (shark) attorney's hands they will find something wrong with your lease or something you missed and you will have to spend time and money to address.

Instead of deposit, we do the Non Refundable Move in Fee and if risky we collect last month's rent too.   

We have come to learn it is just part of doing business in Chicago.  

@Mark Ainley

Hi Mark, what amount do you charge for the move-in fee?  Do you collect a security deposit or are you saying its to risky?  I stay away from Chicago and stick to the suburbs. 

We collect move in fee of $500 when we provide appliances and $250 when we have tenants provide.  Legally you can only collect up to 50% of the lease rent otherwise can be deemed as a security deposit.  We stay away from security deposit.

Thanks @Mark Ainley appreciate the info. 

I'm starting to warm up to this idea of move-in fees.  In most of my cases I end up refunding the security deposit.  It would be nice to collect the fee since the typical wear and tear will cost $500 or so.  Painting and cleanup.  

@Mark Ainley I was not aware there was a 50% limit for a move-in fee.  Is that an Illinois limit?  It makes sense why the move-in fees seem low.  

@Kenneth Garrett the 50% rule is part of the CRLTO so only applies in chicago. We only practice Move in Fees in Chicago. In burbs it is deposits as normal. 

I'm in Colorado and collect a deposit equal to 1 month rent, or slightly less, and a non-refundable $150 carpet cleaning fee at the beginning of the lease.  I explain that the fee allows me to have the carpets professionally cleaned and deoderized for each new tenant (which they appreciate as the new incoming tenant).  This also extends the life of the carpet since rarely, in my experience, do tenants hire a professional carpet cleaner...opting instead to rent the cheap machine at the grocery store or not do it at all. 

The move in fee sounds like a great idea, but what incentive does the tenant have to leave the property clean and in good shape if you not holding onto any type refundable security deposit. I ask because I just had a tenant break their lease early and I have written into my lease that they forfeit their security deposit if the lease is broken. The home was very dirty when they left, but they really didn't have any monetary incentive to leave it clean since they were already losing their deposit.

@Kenneth Garrett I've heard about such practices. It sounds strange to me because it seems that somehow your landlord wants to have profit anyway. I'm totally confident that security deposit is much better than "move in" or move out" fee because of possibility to have your money back. Some of the tenants after moving out really need extra money for finding a new place. With such policy, you will get into minus. In any case - you decide. If you want to know more about security deposit and its turnover, you can read it here . And also, my suggestion for you, try to be aware of tenant/landlord law in order not be cheated.

Wish you all the best!

@Kenneth Garrett the reason security deposit is a bad idea in IL and Cook County, and many of the largest owners have moved away from security deposit, is because of the county's stance against landlords. If you miscalculate the security deposit interest (even if it's off by pennies, or even fractions of pennies), the tenants have sued for many months or even years worth of actual rent amounts, AND WON. If it were me, I'd avoid security deposits because the laws have become too cumbersome, and too favorable to tenants. Also, if the damage is worse, you'll have to go after them anyway for the damages. Look into the landlord tenant act and learn every word of it to avoid problems.

@Kenneth Garrett  I agree with @Mark Ainley