I collected a $1,500 security deposit and from the looks of it that’s not going to cover the damages my tenants left behind. Rent is $1,500/mo, should I collect $3,000 next time or is this too much?
A higher security deposit may make it harder for you to fill your vacancy – it depends on how competitive the rental market is in your area. Plus, in some states there are limits as to how much security deposit you can collect so increasing your security deposit might not even be an option. A full breakdown of security deposit maximums by state are listed at the bottom of this article.
However, there is another way for you to protect yourself that doesn’t involve charging a higher security deposit. After you screen a rental applicant on AAOA you or your applicant can purchase LeaseGuarantee so you can protect your rental. LeaseGuarantee starts at $299 annually for $2,500 of coverage. This not only covers damages a tenant leaves, it can also cover legal fees and lost rent. With coverage options up to $10,000 you’ll have substantially more protection than you get from a security deposit alone.
So how can you negotiate LeaseGuarantee with your tenants? Some landlords will purchase it to supplement the security deposit or others may slightly increase rent by $30-$50 each month to cover the cost of LeaseGuarantee. Others eliminate the security deposit completely and require LeaseGuarantee instead.
Either way you do it, you’ll keep your security deposit relatively low while greatly increasing your coverage.
If you have questions about using LeaseGuarantee please call the AAOA team at (866) 579-2262 or click here.
In addition to LeaseGuarantee, you may want to include quarterly or monthly inspections of the rental so you can catch damage before it worsens.
Below is a breakdown of security deposit maximums for your reference. Please note if N/A is marked in your state, check with you local city to see if the city has imposed any regulations.
|STATE||MAX SECURITY DEPOSIT|
|Alabama||1 month’s rent (A landlord can also collect an additional deposit for pets, tenant alterations, or increase liability)|
|Alaska||2 months’ rent, unless rent exceeds $2,000 per month. (A landlord can ask of an additional pet deposit).|
|Arizona||1.5 month’s rent|
|Arkansas||2 months’ rent|
|California||2 months’ rent unfurnished, 3 month’s rent furnished|
|Connecticut||2 month’s rent, but if the tenant is 62 years of age or older than only 1 month’s rent|
|Delaware||1 month’s rent for lease agreements for one year or more. For month-to-month agreements, there is no legal limit. Landlord’s may require an additional pet deposit.|
|Hawaii||1 month’s rent. May require an additional deposit of one month’s rent if the tenant has a pet. Nonrefundable fees are not allowed.|
|Iowa||2 month’s rent|
|Kansas||1 month’s rent for unfurnished rentals; 1.5 month’s rent for furnished rentals. Kansas landlords may require an additional deposit of up to 1.5 month’s rent for pets.|
|Maine||2 month’s rent|
|Maryland||2 month’s rent|
|Massachusetts||1 month’s rent|
|Michigan||1.5 month’s rent|
|Missouri||2 month’s rent|
|Nebraska||1 month’s rent, 1.5 month’s rent for tenants with pets|
|Nevada||3 month’s rent|
|New Hampshire||1 month’s rent or $100 whichever is greater|
|New Jersey||1.5 month’s rent, an additional deposit may be collected annually but may be no greater than 10%|
|New Mexico||1 month’s rent for rental agreements less than a year; there is no state limit for rental agreement over one year|
|North Carolina||1.5 month’s rent on a month-to-month lease and equivalent to two month’s rent for a lease term longer than 2 months, and a reasonable non refundable pet deposit|
|North Dakota||1 month’s rent. If a tenant has a pet the deposit should not exceed $2,500 or the equivalent of two month’s rent, whichever is greater|
|Pennsylvania||2 month’s rent during the first year of tenancy and 1 month’s rent after the first year.|
|Rhode Island||1 month’s rent|
|South Dakota||1 month’s rent|
|Virginia||2 month’s rent|