Security Deposits vs. Move-In Fees: Which Is Better for Your Property?

In the increasingly competitive rental market in Chicago, it’s becoming more and more common for landlords to charge non-refundable move-in fees instead of the more traditional security deposit. There are a number of reasons for the shift to this policy, and in order to decide which is better for you and your properties, it’s important to learn more about why these fees are becoming a standard part of the rental agreement in Chicago.

Tenant Rights for Security Deposits

One of the biggest reasons landlords and property owners are choosing to charge non-refundable fees instead of security deposits is the risk potential that accompany even small, seemingly-insignificant mistakes. For example, if a landlord forgets to date the receipt for the security deposit, tenants are eligible for an immediate return of the deposit, as well as other damages, which can equal up to two times the initial security deposit amount, plus court costs and associated legal fees. With the risk of situations like these arising, it’s not surprising that the non-refundable move-in fee is getting more popular.

What’s more, there are very detailed regulations associated with how landlords have to manage, store, and pay interest on the collected security deposit. While security deposits can be helpful in eviction processes to cover a tenant’s unpaid rent, they may not always be the most ideal choice for your properties—even with helpful property managers taking care of your paperwork and books, the process of dealing with security deposits can sometimes be complicated. When it comes to streamlining the rental process, move-in fees can be a great way to save time and frustration, but it’s up to you to determine what’s right for your properties. If you’re stuck, a property management company can help reveal all the potential benefits and drawbacks of security deposits and fees, allowing you to make the most informed decision.

 

Benefits of Charging Non-Refundable Move-In Fees and Pet Rent in Chicago

For renters, move-in fees have obvious benefits—handing over the equivalent of one or more months of rent as a security deposit can be a tough financial hurdle, and move-in fees are traditionally much less expensive than security deposits—averaging around $200-400 for Chicago tenants.

The benefits of charging non-refundable fees don’t just apply to tenants, though. For landlords in Chicago, charging move-in and pet fees eliminates the need for separate, often-complicated accounts to hold deposits in, and it guarantees immediate income that can be used for property maintenance or other costs.

With non-refundable fees for move-ins, landlords have immediate access to funds that they can use for taking care of routine maintenance and other tasks that need to be done between leases—changing locks, updating directories, painting, small repairs, etc.

Non-refundable fees are easier to keep track of, as well, meaning less work overall for landlords—what’s not to like about that? By collecting fees instead of deposits, you’ll save the time that you would have spent working to ensure you’re meeting all the requirements for holding onto security deposits. As far as tenant rights and landlord responsibilities are concerned, move-in fees are becoming the clear winner for many property owners because they’re convenient, quick to collect, and easy to manage.

Pet Deposits and Pet Rent In Rental Agreements

In addition to choosing between move-in fees or security deposits, another important aspect of any rental agreement in Chicago is how the landlord will manage pet deposits or pet rent. There are a lot of benefits to allowing your tenants to keep pets in their homes, but it’s important to make sure you’re protected, too. Many property owners choose not to charge separate pet deposits and security deposits, and for good reason—if a tenant causes damage that is unrelated to the pet, landlords aren’t allowed to use their pet deposits to cover the damage. Pet deposits can only be used for pet-related damages and maintenance, so many landlords instead choose to simply charge an additional amount of pet rent per month.

By charging an additional amount for pet rent, landlords ensure they’ll have the necessary funding to take care of any pet damage, and they’ll also have guaranteed extra income every month, increasing the profitability of the property.

Your Best Option

Making the choice between charging fees or security deposits will depend on a number of factors—beyond the pros and cons of each option, it can ultimately depend on your personal preference as a landlord. Property management companies can offer valuable guidance for what the best course of action may be. Here at Lofty, we are excited to be of service any time you need help deciding whether to charge fees or deposits for your apartments and condos. Reach out today and see how we can help you live the life you deserve.

Speak with one of our experts to find out how we can supercharge your investment.

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