Can you charge first, last, and a security deposit?
There are three common types of deposits: first month's rent, last month's rent, and a security deposit. As a landlord, you are entirely within your rights to charge new tenants for all three. However, we do not recommend collecting all three deposit types. We recommend collecting the first month's rent and either last month's rent or a security deposit of one month's rent.
Some factors to consider:
Generally, greater Boston rents are very high in comparison to other parts of the country. It is a hard pill to swallow, especially for relocation tenants. With the "new" way of life with COVID, tenants are cautious and taking a hard look at their expenses.
There is currently a high stock of inventory available that varies in price, location, amenities, etc. The competition is tough!
Most rentals are charging a 1/2 month rental fee to be paid by incoming tenants.
If you do the simple math calculations, renting a $1500 apartment and charging all three deposits plus a full rental fee would cost $6000! Having to come up with that large a sum of money for an apartment dramatically reduces your field of interested applicants. It will even make some consider staying where they are and not moving.
In conclusion, as previously stated, we recommend charging incoming tenants the first month's rent, and either last month's rent or a security deposit, plus 1/2 months fee. This way, the units rent faster and property owners experience less loss rental income.