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Is there any logic to apartment deposits?

Discussion in 'Business, Careers & Education' started by crazyquik, Sep 26, 2010.

  1. crazyquik

    crazyquik Senior member

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    Yeah yeah, I know what they are for.

    But how are they priced?

    Growing up, I always thought it was 1 month's rent, that way if the tenant bounces on the landlord without paying the rent, the landlord is covered.

    Then I lived in a few places where it was a half-months rent.

    Recently I just looked at some apartments where it was 10-15% of one-months rent.

    Is there any rhyme or reason to it? Are apartment managers lemmings and just following the crowd of other complexes in setting these rates?
     


  2. yjeezle

    yjeezle Senior member

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    I think it depends on a lot of factors.

    However, I have seen most people charge 1 month's rent when they aren't headed by a larger managing company. With huge complexes with maintenance staff, valet trash, and whatever other accomodations, I tend to see deposits being a lot cheaper (my current apartment I think I paid $120 for deposits)
     


  3. crazyquik

    crazyquik Senior member

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    With huge complexes with maintenance staff, valet trash, and whatever other accomodations, I tend to see deposits being a lot cheaper (my current apartment I think I paid $120 for deposits)

    The one in question is $125 at a large (for the market) complex, which seemed absurdly cheap in relation to the rent.
     


  4. CouttsClient

    CouttsClient Senior member

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    Yes, there is logic to deposits. The large companies are like Walmarts for apartments. They don't charge huge deposits because they don't have to.

    Whenever I've rented a home I've been charged 1 or 2 months rent...in my case that's been quite a lot of money. It also depends on how long it would take the landlord to evict. In DC it's typically 3 full months and more if the tenant knows the laws well...maybe 6 months. So you have to charge as much as possible without scaring away *"good tenants".

    "Good tenants"= Rich people who don't have to work for a living. LOL
     


  5. vettloffah

    vettloffah Well-Known Member

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    out here in the desert many developers aren't charging any deposits at all, there is just too much competition to get tenants renting because of the poor housing market, many are even doing 1 or 2 months free rent.
     


  6. CouttsClient

    CouttsClient Senior member

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    Also, remember the large apartment companies are the Walmarts of the real estate world. They have no incentive to charge large deposits because they make money on volume and would lose tenants because most people renting can't afford to pay large deposits...that's why they're renters and not home owners...
     


  7. ginlimetonic

    ginlimetonic Senior member

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    I work in actuarial pricing.

    Prices are often set by market, regardless of underlying basis. What you charge depends on if you're a taker or price setter.

    Prevailing market custom is 1 mths rent as bond, so thats how its set.

    / thread closed
     


  8. Don Carlos

    Don Carlos In Time Out

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    I work in actuarial pricing. Prices are often set by market, regardless of underlying basis. What you charge depends on if you're a taker or price setter. Prevailing market custom is 1 mths rent as bond, so thats how its set. / thread closed
    This. I've usually seen it set at 1x a single month's rent, though I have had it go as high as 1.5x, depending on the market and the prestige level of the apartment. Generally speaking -- and this should come as no great shock -- markets in which the demand outstrips the supply put the power in the suppliers' hands. In these cases, rent and security deposits are usually astronomical. This happens quite a bit in small college towns, for instance. New Haven, CT, for example, is a ghetto and a God-forsaken shithole. But rent in campus-adjacent apartments there is higher than in many tony big-city neighborhoods.
     


  9. Sartorial1

    Sartorial1 Senior member

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    My family owns and develops real estate.
    We avoided setting a deposit equaling the amount of rent.
    The difference is intended to discourage tenants from thinking of the deposit as an acceptable payment in lieu of the last month's rent.
    A deposit is not rent.
    A deposit covers damages (beyond normal wear and tear) that may be caused by the tenant.
     


  10. Hombre Secreto

    Hombre Secreto Senior member

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    Some crazy bitch threw a chair at me which made a big hole on one of my walls and the owner didn't give me my deposit back when I left.
     


  11. Harold falcon

    Harold falcon Senior member

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    My family owns and develops real estate.
    We avoided setting a deposit equaling the amount of rent.
    The difference is intended to discourage tenants from thinking of the deposit as an acceptable payment in lieu of the last month's rent.
    A deposit is not rent.
    A deposit covers damages (beyond normal wear and tear) that may be caused by the tenant.


    In PA landlords are prohibited from using the security deposit to cover rent, even if the tenant skips without paying for several months. It happens all the time though, and when we do get tenants in our office about it they can actually recover TWICE the security deposit back from the landlord if it's not refunded.
     


  12. Sartorial1

    Sartorial1 Senior member

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    In PA landlords are prohibited from using the security deposit to cover rent, even if the tenant skips without paying for several months. It happens all the time though, and when we do get tenants in our office about it they can actually recover TWICE the security deposit back from the landlord if it's not refunded.
    That makes me happy we stick to South Carolina (Charleston) & Georgia (Savannah) and the barrier islands of both states.
     


  13. Don Carlos

    Don Carlos In Time Out

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    Some crazy bitch threw a chair at me which made a big hole on one of my walls and the owner didn't give me my deposit back when I left.

    Generally, they don't care how the damage was incurred. If they didn't do it, they basically treat the situation as though you did. And good luck arguing against it.

    A few years back I lived in an apartment next door to a bunch of young, idiotic, spoiled 22 year old chicks. (Unfortunately, they were not hot). Anyhow, one of them stumbled home drunk one night and puked all over the hallway carpet in front of my door and hers. When it came time to move, I was denied my deposit on account of the puke stains. I was also assessed cleaning fees. I tried explaining the situation, and even demanded that they look at the security footage. No dice. I was fucked. It was not worth the expense of hiring a lawyer and going to small claims court, so they won.
     


  14. dunga

    dunga Senior member

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    Yeah yeah, I know what they are for.

    But how are they priced?

    Growing up, I always thought it was 1 month's rent, that way if the tenant bounces on the landlord without paying the rent, the landlord is covered.

    Then I lived in a few places where it was a half-months rent.

    Recently I just looked at some apartments where it was 10-15% of one-months rent.

    Is there any rhyme or reason to it? Are apartment managers lemmings and just following the crowd of other complexes in setting these rates?


    I took four months from my last tenant. Since he was a UN employee, relocating to NY with no real assets here , I was worried that he would trash the place and skip town. One month was the security deposit and the other three were to be applied against the last three months rent. (plus first month up front). He took offense and agreed to my terms if I would take a few hundred a month off the rent. That was worthwhile to me, so I agreed. He turned out to be a great tenant and I was sorry to see him relocate to the UN in Tehran.
     


  15. HEWSINATOR

    HEWSINATOR Senior member

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    Interesting aside: In our province, you can only charge a deposit up to one months rent. Thanks government for looking out for me. But then, for me, I have pets, so instead of the landlord taking a larger deposit, because it would seem they can not, they just charge a pet fee. I love when the government gets involved.

    And here, one months rent is all I have ever seen. Never less.
     


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