I know we are all limited by law in what we can charge a tenant, but be sure you are collecting the max you can.

I've been doing 2x the rent for new tenants for several years now as that is NC Max. But a few years ago I went back and billed all my OLD tenants as well: when they signed a new lease, their security deposits increased along with the rent, so any increase (say $25 to pick any number) meant they also owed $50 (2x the rent INCREASE) to increase the SD on hold to its correct amount.

Even if I didn't increase their rent I still increased the deposit to the 2xRent. It was an interesting couple of years collecting it all - and I did payment plans on a few where the SD increase was quite high - but I did and now everyone has 2x on file and they expect it at lease renewal now.

Well except one guy is on a M2M and if it's not an Annual Lease, I can only collect 1.5 times the rent. He just got a raise in rent of $100, and a bill for $150 for the SD increase. Paid it without a question.

I don't feel bad about this at all. I figure if they take care of my property - SID would say if they are good stewards - I will be a good steward of THEIR money and return it all when their tenancy is up. Like a tax refund, it's kind of forced savings for them.

Having 2xRent on hold makes them much more conscious of lease terms such as NOTICE and CLEANING and COOPERATION...they now have substantial money in the bank waiting for them. Some more than $3500.

I *could* have used those payments towards even more increased rent, but I personally like the security of having it in the bank and the delight (of all) when I return it all because I get back clean, rent-ready places.

All in separate savings accounts, accumulating

interest, rewarding all of the long term tenants,

Nice work, WMH! I need to consider how I might implement this with old tenants who got in with less than that.

I am definitely getting the max security for new tenants. Too many blips have been popping up recently. Not a ton, but too many. One blip is too many in my book!

Missouri also limits us to 2x the rent. Any time I have someone with no landlord history or no credit (not BAD credit), I demand (and have been getting) the double security. I'll be interested to see how it helps at move out time.

Side note: the limit on security deposit was set with good intentions, I'm sure, but it also makes it impossible for me to consider mediocre or worse tenants. I cannot imagine giving keys to someone who was evicted 2 years ago without having AT LEAST 3 months security.... preferably 6 months! The crazy thing is: some of them have that much cash sitting around because they've been camping in Mom's basement for 24 months doing nothing but saving money... but I can't, by law, accept it even if they are totally willing and able to pay it.

Law of unintended consequences. I wonder if more are hurt than "helped?"

Ken, when I send out my renewal letters with an increase, it also includes a statement about the increase of the security deposit "to make it the same as rent". They all have paid it (so far) and I've been doing it for a few years.

Prior, I never thought about increasing the SD until I read it on here and thought "oh man, I totally forgot about the SD!!"

When I talk with them it actually makes it much easier for both of us to fully understand what the SD would be to get back (my rent is $800 so that is what my SD would be coming back to me).

RB, the SDs sit in an LL Trust account, combined per LLC, and any interest accrued is for the benefit of the LL. State law as long as that is spelled out in the lease.

If the state ever comes knocking, I need to be able to produce a complete breakdown of how much is being held for who. I track that anyway so no big deal.

(We had a major PM here put out of business for not being careful with the tenant deposits. Stupid.)

As someone else from NC told me (here) judges don't like to see EXTRA money in that account either, they want it to balance and not include any of the LL's money. So interest is withdrawn as it accrues...which is really pennies but I still transfer it out as soon as it is deposited.

One of the few benefits of an LLC is that I used to have to maintain a separate account for every single unit, which really was a pain.

I mostly do 2x rent. Great credit will go 1x.

Also did this once in past it might violate SD law but I don't think so because not SD but prepaid rent.

Less than stellar applicant so offer them this. SD 2x rent and they must pay rent early and STAY prepaid ahead 2 months.

So 600 rent, 1200 SD, 1200 prepay rent, 3000 at move in. Worked pretty good.

I need to get back to this and I need to look up the law that Vee mentions.

W,

You go girl!!

You run a great operation. Interesting to see the success of your approach. We must adapt.

My thought is that cleaning and repair costs have gone up much more than rents, AND with rents much higher if they fall behind the numbers grow quickly, so a single month as security may not be enough.

Find what people want and let them pay you for it! They want your nice places.

BRAD

A single month is not enough, it becomes last month's rent in their mind. TWO months does not.

AND...

Good to challenge us all to review state law and review want we CAN do.

I have never brought deposits up. I know it is needed.

It has only been a few years since I started bumping rents for existing tenants.

The rent increases have proven once again why I try and pay attention in class here.

I honestly think I started the 2x the rent trend that is becoming normal here locally. It was all one month's rent when we first started. At first I started with a few hundred more than rent and explained to tenants that it was so we all understood and agreed it was NOT last month's rent, and that explanation always went over just fine.

When I decided to increase to 2x the rent, I just cited inflation: cost of materials and labor IF there should be a problem - of course I didn't expect there to be one...(at least that's what I said!) But it really turned out to be true: higher deposit, better care taken of property. Faster reporting of potential damage-causing problems (water!) And so on.

Bottom line. I’m insecure. I am afraid of “Ian, I have this x problem and can’t pay my rent”. The math of an eviction is much more than 2x security deposit.

So…now that Georgia is about to limit security deposits to 2x rent, what are additional ways to get security?

I’ve looked at:

1) Co-signers

2) Security deposit insurance

3) Collection agencies and garnishments

These are just OK. I really just want cash. I am disciplined enough to hold the money in a separate account. It’s not my money. I can’t borrow it, spend it or invest it. I just look at it. Then, I work my butt off doing repairs and providing good customer service. It works. Customers stay with me a long time.

But back to the question, what can I call the extra cash beyond the new limit of 2x rent for SD?

Administrative fee

Incentive fee

I work for you and do repairs, but some people burn me fee

Performance fee

We had storms here this week and a tree fell. Thankfully nobody got hurt. Also, a carport ceiling needs repair. I gotta go. But if anyone can help with a name for the extra cash, please help.

Thanks

What you really need is good hard screening of tenants! You need responsible, cooperative tenants who CARE about getting their deposit back, who care about their own home, who care about paying their bills and their credit rating.

You could charge 10 times the rent for a deposit but if you get the wrong tenants it won't matter. Think of 1970's Rock Stars in Hotel Rooms LOL! They could afford the destruction, and didn't care...