Collecting irst and last month rent PLUS 2 month security deposit

Columbus, Ohio
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Collecting irst and last month rent PLUS 2 month security deposit

Filmon Michael
Columbus, OH · Member since 2016 · 11 posts · 9 votes

A high risk tenant wants to rent my property in Columbus, OH. He is willing to pay first and last month as well as two month security deposit all upfront. I am comfortable with the upfront payment but not sure this is legal. Please advise if I can collect this much upfront. Thanks!

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Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
5y
Originally posted by @Allen Tracy:
Originally posted by @Remington Lyman:
Originally posted by @Allen Tracy:

Not sure on the legality part but are you sure you want to rent to a high risk tenant?  I just lost around $4,000 to evict an inherited tenant and another investor I know just lost $12,000 to evict a high risk tenant he thought would be ok to rent to.

 Damn, that sucks. Can you tell the story?

I don’t know exactly what damages were done for the $12,000 eviction but I know it took a lot longer to get the tenant out.

The inherited tenant I had to evict never wanted to pay full rent, stopped paying rent completely, and stopped all communication.  They were super dirty so cockroaches and bedbugs made their way in and into the other unit which was over $1,000 to treat. It took a couple of months to get the tenant evicted since the courts are so backed up, then $500 to clean the place out after they left. I think I was lucky though since they didn’t do any damage and they weren’t a big hoarder. 

Did you get your money from impact? Ohio is doing helicopter money to landlords right now for these situations. 

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  • Allen Tracy
    Chatsworth, CA · Member since 2016 · 190 posts · 224 votes
    5y

    Not sure on the legality part but are you sure you want to rent to a high risk tenant?  I just lost around $4,000 to evict an inherited tenant and another investor I know just lost $12,000 to evict a high risk tenant he thought would be ok to rent to.

    2Reply
  • Dan Armich
    Member since 2020 · 36 posts · 33 votes
    5y

    Don’t rent to the high risk tenant. If someone was normal risk, they would not need or want to pay you so much up front. 

    Let me ask you this; would you still rent to this person if they were in the process of an eviction right now? The money doesn’t make a difference to the answer for me. 

    2Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    If they don't meet the criteria you have set for the tenant, I would not rent to them. More money up front is never a good idea. 

    1Reply
  • Jason DeVelvis
    Investor · Columbus, OH · Member since 2020 · 28 posts · 20 votes
    5y

    Also, if you accept anything more than 1 month's rent as a security deposit in Ohio, you have to pay them interest. Talking with your lawyer & accountant would definitely make sense before doing this so you know what you need to keep track of, and how much you'll owe them for holding their money. Or, perhaps this makes your decision easier, lol :) 

    I'm all for giving folks a second chance, especially if they're being proactive and up front, but you should definitely assume this tenant will be more work (possibly much more work) than your other tenants until you have a few months with them under your belt. Maybe do a shorter lease or M2M as a trial period? Still may be more trouble than they're worth, though.

    0Reply
  • Jason DeVelvis
    Investor · Columbus, OH · Member since 2020 · 28 posts · 20 votes
    5y
    Originally posted by @Allen Tracy:

    Not sure on the legality part but are you sure you want to rent to a high risk tenant?  I just lost around $4,000 to evict an inherited tenant and another investor I know just lost $12,000 to evict a high risk tenant he thought would be ok to rent to.

     $12k? Ouch! Was that in Columbus? Or CA?

    1Reply
  • Zac Mckenzie
    Contractor · Columbus, OH · Member since 2017 · 85 posts · 83 votes
    5y

    Develop standards for for the the amount of risk you will accept and then stick to your standards. After a period time you can reevaluate your standard but you won't know which direction to go until you set and act on a baseline. 

    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Filmon Michael:

    A high risk tenant wants to rent my property in Columbus, OH. He is willing to pay first and last month as well as two month security deposit all upfront. I am comfortable with the upfront payment but not sure this is legal. Please advise if I can collect this much upfront. Thanks!

    I have a few lawyers in Columbus, Ohio that you can reach out to. 

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    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Allen Tracy:

    Not sure on the legality part but are you sure you want to rent to a high risk tenant?  I just lost around $4,000 to evict an inherited tenant and another investor I know just lost $12,000 to evict a high risk tenant he thought would be ok to rent to.

     Damn, that sucks. Can you tell the story?

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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    1Reply
  • Allen Tracy
    Chatsworth, CA · Member since 2016 · 190 posts · 224 votes
    5y
    Originally posted by @Jason DeVelvis:
    Originally posted by @Allen Tracy:

    Not sure on the legality part but are you sure you want to rent to a high risk tenant?  I just lost around $4,000 to evict an inherited tenant and another investor I know just lost $12,000 to evict a high risk tenant he thought would be ok to rent to.

     $12k? Ouch! Was that in Columbus? Or CA?

    That was in Columbus. It included lost rent for the time it took to get them out, legal fees, and damages they did to the property.  

    0Reply
  • Jason DeVelvis
    Investor · Columbus, OH · Member since 2020 · 28 posts · 20 votes
    5y
    Originally posted by @Allen Tracy:
    Originally posted by @Jason DeVelvis:
    Originally posted by @Allen Tracy:

    Not sure on the legality part but are you sure you want to rent to a high risk tenant?  I just lost around $4,000 to evict an inherited tenant and another investor I know just lost $12,000 to evict a high risk tenant he thought would be ok to rent to.

     $12k? Ouch! Was that in Columbus? Or CA?

    That was in Columbus. It included lost rent for the time it took to get them out, legal fees, and damages they did to the property.  

    Ouch. I guess I forget to consider how quickly purposeful damage can increase the bill... I've been lucky that I've only seen one evicted tenant do a little damage on the way out.

    1Reply
  • Allen Tracy
    Chatsworth, CA · Member since 2016 · 190 posts · 224 votes
    5y
    Originally posted by @Remington Lyman:
    Originally posted by @Allen Tracy:

    Not sure on the legality part but are you sure you want to rent to a high risk tenant?  I just lost around $4,000 to evict an inherited tenant and another investor I know just lost $12,000 to evict a high risk tenant he thought would be ok to rent to.

     Damn, that sucks. Can you tell the story?

    I don’t know exactly what damages were done for the $12,000 eviction but I know it took a lot longer to get the tenant out.

    The inherited tenant I had to evict never wanted to pay full rent, stopped paying rent completely, and stopped all communication.  They were super dirty so cockroaches and bedbugs made their way in and into the other unit which was over $1,000 to treat. It took a couple of months to get the tenant evicted since the courts are so backed up, then $500 to clean the place out after they left. I think I was lucky though since they didn’t do any damage and they weren’t a big hoarder. 

    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Allen Tracy:
    Originally posted by @Remington Lyman:
    Originally posted by @Allen Tracy:

    Not sure on the legality part but are you sure you want to rent to a high risk tenant?  I just lost around $4,000 to evict an inherited tenant and another investor I know just lost $12,000 to evict a high risk tenant he thought would be ok to rent to.

     Damn, that sucks. Can you tell the story?

    I don’t know exactly what damages were done for the $12,000 eviction but I know it took a lot longer to get the tenant out.

    The inherited tenant I had to evict never wanted to pay full rent, stopped paying rent completely, and stopped all communication.  They were super dirty so cockroaches and bedbugs made their way in and into the other unit which was over $1,000 to treat. It took a couple of months to get the tenant evicted since the courts are so backed up, then $500 to clean the place out after they left. I think I was lucky though since they didn’t do any damage and they weren’t a big hoarder. 

    Did you get your money from impact? Ohio is doing helicopter money to landlords right now for these situations. 

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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    2Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y

    @Filmon Michael here is a link to Ohio landlord-tenant laws. You should read through this to familiarize yourself with the laws that apply.

    https://codes.ohio.gov/ohio-re...

    It looks like you can charge two months rent as security deposit, but any amount over one months rent must accrue interest at 5% or more per year and must be paid annually to the tenant. 

    Here is the exact text of the law:

    (A) Any security deposit in excess of fifty dollars or one month's periodic rent, whichever is greater, shall bear interest on the excess at the rate of five per cent per annum if the tenant remains in possession of the premises for six months or more, and shall be computed and paid annually by the landlord to the tenant.

    Instead of charging an extra security deposit, you may want to consider a risk mitigation fee. This fee is non-refundable and is charged to higher risk tenants based on factors like low credit score. Make sure these types of fees are legal in your area. 

    2Reply
  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    5y

    I agree with everyone else that it is for sure risky. But on the other side of the coin. I was this guy at one point and I did the same thing as he did. I gave the lady 4 months up front plus a security deposit. My credit was bad because in my young 20's I had some health issues had to stop working and that ended up tanking my credit in the end. I had a sit down with my potential future landlord told her the situation and how I think I could ease her worries. I did and everything worked out just fine. BUT HONESTLY IM THE EXCEPTION. Just wanted to bring a little light into this doom and gloom I'm reading lol

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    1Reply
  • Allen Tracy
    Chatsworth, CA · Member since 2016 · 190 posts · 224 votes
    5y
    Originally posted by @Remington Lyman:
    Originally posted by @Allen Tracy:
    Originally posted by @Remington Lyman:
    Originally posted by @Allen Tracy:

    Not sure on the legality part but are you sure you want to rent to a high risk tenant?  I just lost around $4,000 to evict an inherited tenant and another investor I know just lost $12,000 to evict a high risk tenant he thought would be ok to rent to.

     Damn, that sucks. Can you tell the story?

    I don’t know exactly what damages were done for the $12,000 eviction but I know it took a lot longer to get the tenant out.

    The inherited tenant I had to evict never wanted to pay full rent, stopped paying rent completely, and stopped all communication.  They were super dirty so cockroaches and bedbugs made their way in and into the other unit which was over $1,000 to treat. It took a couple of months to get the tenant evicted since the courts are so backed up, then $500 to clean the place out after they left. I think I was lucky though since they didn’t do any damage and they weren’t a big hoarder. 

    Did you get your money from impact? Ohio is doing helicopter money to landlords right now for these situations. 

    Oh wow, hadn't heard anything about that, thanks for the heads up, I'll ask Donny about that.

    1Reply
  • Allen Tracy
    Chatsworth, CA · Member since 2016 · 190 posts · 224 votes
    5y
    Originally posted by @Remington Lyman:
    Originally posted by @Allen Tracy:
    Originally posted by @Remington Lyman:
    Originally posted by @Allen Tracy:

    Not sure on the legality part but are you sure you want to rent to a high risk tenant?  I just lost around $4,000 to evict an inherited tenant and another investor I know just lost $12,000 to evict a high risk tenant he thought would be ok to rent to.

     Damn, that sucks. Can you tell the story?

    I don’t know exactly what damages were done for the $12,000 eviction but I know it took a lot longer to get the tenant out.

    The inherited tenant I had to evict never wanted to pay full rent, stopped paying rent completely, and stopped all communication.  They were super dirty so cockroaches and bedbugs made their way in and into the other unit which was over $1,000 to treat. It took a couple of months to get the tenant evicted since the courts are so backed up, then $500 to clean the place out after they left. I think I was lucky though since they didn’t do any damage and they weren’t a big hoarder. 

    Did you get your money from impact? Ohio is doing helicopter money to landlords right now for these situations. 

    This was Donny's response, not sure what can be done at this point.

    "we can get money for the tenant to let them stay..its called impact and prcwe do that 24/7..but they have to apply and get approved"

    0Reply
  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Filmon Michael:

    A high risk tenant wants to rent my property in Columbus, OH. He is willing to pay first and last month as well as two month security deposit all upfront. I am comfortable with the upfront payment but not sure this is legal. Please advise if I can collect this much upfront. Thanks!

     If I'm not mistaken you're legally supposed to pay interest on any deposits collected over one month's rent. On top of that, I wouldn't risk renting to high-risk tenants, unless they're willing to pay for half or better yet, the entire term up front. There are plenty of people looking so I would argue it's worth waiting for another applicant. Good luck! 

    0Reply
  • Margie Kohlhaas
    Rental Property Investor · Algona, IA · Member since 2015 · 43 posts · 33 votes
    5y

    @Filmon Michael

    I had a tenant give me 6 months rent upfront from their tax return. The rest of the year it was like squeezing lemons. They had no money and no place to go. Always had lots of sob stories. We finally had to evict and lost about a month of rent in the end.

    0Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    5y

    This is basic landlord/tenant rules and guidelines info. Any experienced investor should be able to fill you in on how it is done in your state. You shouldn’t have to hire an attorney. 

    On a side note, unless the area is really bad no risky tenant is worth any amount of security deposit. There are hidden costs associated with bad tenants that no security deposit will cover. 

    0Reply
  • Filmon Michael
    OP
    Columbus, OH · Member since 2016 · 11 posts · 9 votes
    5y

    Thank you all for your great inputs. Already found a well qualified tenant. Thanks!

    1Reply
  • Roy Nash
    Rental Property Investor · Spokane, WA · Member since 2018 · 64 posts · 59 votes
    5y
    Originally posted by @Filmon Michael:

    Thank you all for your great inputs. Already found a well qualified tenant. Thanks!

    Great Decision.   After over a year of Covid Rental Eviction Moratorium in WA State, My Screening will be much more strict in the future.   I have screened well in the past and never had a problem with somebody I have chosen.  However I have had problems with some inherited tenants during the Eviction Moratorium.   In the future, I will not rent to anybody that owes their previous landlord money or has a poor rental history.  In fact there is an abundance of well qualified tenants so no more 2nd chances for marginal tenant prospects.   That's the flip side of rental protections imposed on landlords.

    0Reply
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