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RENTALS...and security deposit amount

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RENTALS...and security deposit amount

Old 06-30-2019, 06:55 AM
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Default RENTALS...and security deposit amount

I currently charge one month's rent as a security deposit. However, tenants that don't have garnishable income cost me whenever i have to evict. I'm considering charging a 2-month deposit to those that are government checks, self-employed, or service industries. That gives me a cushion for lost rent if they stop paying, and gives them an incentive to keep paying rent.

Is there any law in your state that says a landlord can only charge one month's rent as a deposit?

Old 06-30-2019, 07:05 AM
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The problem I see with that is inconsistency, If you are charging certain groups more than others I see that coming back to bite you in the ass , I can see very few people (government checks, self-employed, or service industries) being able to come up with that much cash upfront.
Old 06-30-2019, 07:18 AM
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Depends on your rental.

A nice rental in a decent area with high demand and upscale clients can get away with two months security deposit. I actually learned an important lesson from the THT on this topic. At first I thought it was cruel and unreasonable but as I now own a rental, I see the light.

If rent is 3 days late = For rent sign goes on the law as a sign to the renter
If rent is 10 days late= Eviction process starts

Dont let them get behind. This is a business and no room for a bleeding heart. Be upfront when showing the house that you dont play games or accept excuses. No mercy and rent is the one bill that must be paid even if they are sitting at the bus stop giving handjobs for cash. If you rent to a single mom with three kids do you have the strength to throw them out in the street? Many dont (understandably) and it costs them. I am not running a charity.
Old 06-30-2019, 07:28 AM
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Originally Posted by mikeloew View Post
The problem I see with that is inconsistency, If you are charging certain groups more than others I see that coming back to bite you in the ass , I can see very few people (government checks, self-employed, or service industries) being able to come up with that much cash upfront.
Not sure about the inconsistency angle since IMO leases are a single item, exclusive of other properties in the area, but I could be wrong. The tenants that have bit me in the ass have been in the categories I mentioned, and non-garnishable income is a nightmare for landlords; especially if only one month deposit because it takes two months minimum to evict.

Our area has a higher demand for rentals, so asking for a larger deposit weeds out the borderline financial cases...and that lets me sleep better.

Is what I'm doing legal, though?
Old 06-30-2019, 07:30 AM
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Have always seen it is credit based. Poor credit 3 months. Good credit 1 month. Don't see how this is any different. Listen to your gut man 2 months it is.
Old 06-30-2019, 07:34 AM
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We add into the monthly rental rate, renters insurances, that way we have another recourse when damage occurs, which it will...
Old 06-30-2019, 07:38 AM
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Originally Posted by bamaboy473 View Post
I currently charge one month's rent as a security deposit. However, tenants that don't have garnishable income cost me whenever i have to evict. I'm considering charging a 2-month deposit to those that are government checks, self-employed, or service industries. That gives me a cushion for lost rent if they stop paying, and gives them an incentive to keep paying rent.

Is there any law in your state that says a landlord can only charge one month's rent as a deposit?
yup. Rhode Island law - security deposit can be no more than one months rent. It is black letter law here.

https://www.american-apartment-owner.../rhode-island/
Old 06-30-2019, 07:40 AM
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Originally Posted by bamaboy473 View Post
Not sure about the inconsistency angle since IMO leases are a single item, exclusive of other properties in the area, but I could be wrong. The tenants that have bit me in the ass have been in the categories I mentioned, and non-garnishable income is a nightmare for landlords; especially if only one month deposit because it takes two months minimum to evict.

Our area has a higher demand for rentals, so asking for a larger deposit weeds out the borderline financial cases...and that lets me sleep better.

Is what I'm doing legal, though?
If in Alabama, no, what you propose is not legal.

https://www.american-apartment-owner...t-laws/alabama
Old 06-30-2019, 07:43 AM
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Originally Posted by bamaboy473 View Post
Not sure about the inconsistency angle since IMO leases are a single item, exclusive of other properties in the area, but I could be wrong. The tenants that have bit me in the ass have been in the categories I mentioned, and non-garnishable income is a nightmare for landlords; especially if only one month deposit because it takes two months minimum to evict.

Our area has a higher demand for rentals, so asking for a larger deposit weeds out the borderline financial cases...and that lets me sleep better.

Is what I'm doing legal, though?
the laws are different all over, not just in different states, but in some cases, different municipalities in the same state. No offense, something this important (it is your business and your property) don't solicit opinion/guesses from an internet forum, rather ask a local lawyer or other expert.

even though the links to the Alabama site is helpful, it is not the entire answer. I have seen (not in AL) 1st month, last month + security deposit. is that away around the one month security? I don't know, ask an expert
Old 06-30-2019, 08:07 AM
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There aren't a lot of 2-month situations, but a new tenant said it wasn't legal, hence the question. First/last/security deposit would seem to be the better wording, though. I'll run this by my attorney and get his opinion so I can change the wording in the lease if need be.

The concept of having the extra deposit allows for a simple eviction instead of trying to go for past rent. In Alabama, the time between both of those types of eviction is substantial, so being able to cushion lost rent for a month makes good business sense.

To the poster asking about evicting a mom with 3 kids, this is a business and (in most cases) any reason for not paying rent is an excuse, regardless of family. Somebody on government assistance gets a guaranteed amount every month, so not paying rent is only done to stiff the landlord and hide behind a tenant-loving judge. I decline to rent to those types out of experience; single workers or double income families are my target market.
Old 06-30-2019, 08:20 AM
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Yes it is in Alabama, Read the landlord tenant act that went into effect about 3 years ago You cannot charge more than a months rent and the deposit must be put into a trust account for deposits only. You cannot use the deposit for past due rent, it is a damage deposit, if not returned to the renter in specified time, the penalty is statutory at three times the rent
Old 06-30-2019, 08:23 AM
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There is no limit in Florida. Here's the statute...Statutes & Constitution :View Statutes : Online Sunshine

THat being said, I'd be real careful about targeting a specific group of people. Can only lead to a discrimination law suit.
Old 06-30-2019, 08:36 AM
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Depends on law and location. That is illegal some areas, I believe I am one of them, but don't do rentals. However, fair housing will be on your ass in a heartbeat if you are charging various amounts to different people.
Old 06-30-2019, 09:16 AM
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I go off credit score. Below 600 First and last month and security deposit equal to the total value of kitchen appliances.
I give a discount on the last month if their score is good.

They can't afford it I don't need them.

Doug
Old 06-30-2019, 09:40 AM
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Message sent to my attorney here in Alabama.

Not being able to charge more than one month of rent, and not being able to use security deposit for un-paid rent, means that those that don't pay rent get away un-scathed if they don't have garnishable jobs. That will force me to weed out anybody with an iffy rental history and nobody to co-sign. Sucks for tenants that need apartments/homes. Sucks for landlords that try to help people out by not having a full-fledged application/credit check policy.
Old 06-30-2019, 09:50 AM
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Originally Posted by dihrah View Post
Yes it is in Alabama, Read the landlord tenant act that went into effect about 3 years ago You cannot charge more than a months rent and the deposit must be put into a trust account for deposits only. You cannot use the deposit for past due rent, it is a damage deposit, if not returned to the renter in specified time, the penalty is statutory at three times the rent
I tried to read the Act and couldn't find anything related to First and Last month's rent being collected, in addition to a security deposit. Can a landlord charge First and Last month's rent prior to possession?
Old 06-30-2019, 10:08 AM
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Originally Posted by bamaboy473 View Post
I tried to read the Act and couldn't find anything related to First and Last month's rent being collected, in addition to a security deposit. Can a landlord charge First and Last month's rent prior to possession?
In RI - yes, but with caveats. The first and last can ONLY be used for rent purposes and not for damages of any kind. The first and last must immediately be credited towards the lease.

There are some workarounds you can use - pet deposits, variable rate rents, etc but some of these flirt with the line of tenant rights.
Old 06-30-2019, 10:12 AM
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Originally Posted by Jersus View Post


In RI - yes, but with caveats. The first and last can ONLY be used for rent purposes and not for damages of any kind. The first and last must immediately be credited towards the lease.

There are some workarounds you can use - pet deposits, variable rate rents, etc but some of these flirt with the line of tenant rights.
Thanks....that would work for my purposes. I'll see what my attorney says.
Old 06-30-2019, 11:58 AM
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In NJ it's 1.5 months security.

Let me propose the idea that you are not making the best selection as to who you let occupy your properties.

I don't know how it works by you but here we contract a realtor, they get a 1 months finders fee paid by the tenant, they sort out all the details, get credit reports, confirm income, etc. then as a landlord we interview the best looking 2 or 3 and make a choice from there.

If they have 1st months, 1.5 months security and 1 months for the realtor they at least have 5K at risk.
Old 06-30-2019, 12:06 PM
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Originally Posted by bamaboy473 View Post
I currently charge one month's rent as a security deposit. However, tenants that don't have garnishable income cost me whenever i have to evict. I'm considering charging a 2-month deposit to those that are government checks, self-employed, or service industries. That gives me a cushion for lost rent if they stop paying, and gives them an incentive to keep paying rent.

Is there any law in your state that says a landlord can only charge one month's rent as a deposit?
You will have to check your State's laws. I have a rental here in Alaska, and there is indeed a law that limits the amount of "prepaid rent or deposit" you can require. Basically comes down to a deposit of 1 months rent, and yes, it puts the landlord into a bad situation when you have to evict. I've run into exactly what you are describing.

2 things. Check your local laws. Also, make it consistent across all tenants, not based on the type of income they have, seems like they could be interpreted as discrimination.

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