If you’re a new renter, you might be unfamiliar with just how much it costs to rent an apartment, or if you’ve always shared with a roommate or owned your home, you might not have directly applied for an apartment. In any case, there are plenty of reasons you may have never encountered the infamous “security deposit.”
One of the most common fees associated with leasing a home, it can be difficult to understand why a security deposit is required to get the keys to a new place. You might find yourself wondering...
While you’re apartment hunting, you might notice that there is a “security deposit” required when applying for an apartment!
A security deposit is a sum of money that a new renter pays to a landlord or property manager before moving into a rental home. You pay this deposit sometimes directly to your landlord or property manager, or sometimes to a real estate agent or broker on the behalf of the landlord. The amount will be included in your rental agreement.
This money is put into an escrow bank account for the term of your lease, and then returned to you at the end of the lease if you don’t skip rent or cause any damages to your home during your occupancy!
A landlord requires the security deposit to protect their rental property in case of damages or unpaid rent. More to come on that...
So why does a landlord require a security deposit? A security deposit is used at the end of your lease agreement, after you move out, to pay for a number of things.
1. Property damage
It’s likely that you may accidentally damage your rental unit during your stay. Say you knock a hole in a wall or leave water stains on hardwood floors and window sills, without repairing it after you move out. Your landlord has the right to use the security deposit to cover the cost of repairs.
Keep in mind, the security deposit can only be used for excessive wear-and-tear, not normal wear-and-tear. Normal wear-and-tear includes things like dirty grout, paint chipping, or tarnished from time fixtures while excessive wear-and-tear accounts for more explicit damage.
2. Missed rental payments
If you miss any rent, whether a fraction of a full rental payment or a full month’s rent, the security deposit can be used to cover the loss after your tenancy ends.
You might have heard that your security deposit is meant to cover your last month’s rent, and you don’t have to pay rent the final month of your lease. This is not true, but a prevailing myth. (Keep in mind, if you cause minimal damage and pay every month of rent, then you get to have your security deposit back at the end of the lease.)
3. Key replacement and/or cleaning costs
While it’s a hassle to clean your apartment or rental home before heading out to a new place, it could cost you a lot to skip the scrub-down. Security deposits can be used to cover the cost of cleaning or the price of hiring cleaners after you move out, especially if the unit is left particularly dirty. Similarly if you forget to turn in your keys to your landlord, the security deposit covers the cost of replacing the key.
Good news: After your landlord uses the security deposit to cover the costs, or if they don’t have to use the security deposit at all, it gets returned to you. But sometimes getting your security deposit back can be pretty tricky, and you might have to negotiate or ask your landlord for the security deposit after you move out. A recent Rhino survey revealed that 59% of renters right now are not confident that they would get their full security deposit back.
In two words: A lot. Depending on where you live, a security deposit can cost a lot of money upfront when you’re moving! Some states have different laws to control the amount of the deposit, but on average, it will cost you at least one month’s rent. (For example, in California, the legal limit for a security deposit is two months rent.)
Renters pretty much dread paying it, but it is typically required for good reason: The property owner’s property does need protection after all.
The security deposit is equivalent to one month’s rent, and the average security deposit nationwide is $1,000. However, that’s just the average and security deposits can cost renters even more than just a grand. Some renters who used Rhino instead of paying a security deposit, report that they saved over $10,000!
Keep in mind that when you apply for an apartment (and if you haven’t already paid a security deposit to reserve the unit), that your future landlord will likely run a background check, and a credit check. Every renter should know their credit score before applying, and understand that it might increase the amount of the security deposit your landlord or the property management company will need.
A security deposit is typically required to rent an apartment unless your landlord offers Rhino security deposit insurance!
Security deposit insurance replaces the cash security deposit, and costs way less. When you choose to use Rhino security deposit insurance, you pay small monthly payments as low as $4 per month* instead of paying a cash deposit.
The insurance protects the property owner’s rental unit from damage and unpaid rent, just like a normal security deposit does, so if you accidentally break something or skip rent, you’ll work with Rhino to reimburse your landlord.
So instead of forking over a big chunk of change for your security deposit, and not knowing if you’re ever going to get it back, you purchase security deposit insurance, and when/if damages or unpaid rent occurs, you pay only exactly what you owe to Rhino!
Rhino is available at properties in major cities across 46 states, including:
If you can’t find a property you like on our renter guides, you can still find Rhino on the apartment hunt. Whether you’re touring apartments and rental homes in-person or virtually, add Rhino to your list of questions to ask your future landlord. All you have to do is ask the leasing agent or property manager if they offer Rhino security deposit insurance. It’s as easy as asking about any other amenity!
And there you have it, an introduction to security deposits, and what security deposits cover. While they might seem inescapable, you can always opt to use Rhino instead of paying a cash security deposit to satisfy your move-in requirements.
Use our renter guides, or contact our support team to find a property that offers Rhino near you. Already found the perfect place? You can check if they offer Rhino at your future community! We’re all about saving renters money at move-in.
*Pricing will vary by individual renter. Actual rates determined based on the specific information provided to Rhino. Monthly payment plans may not be available to all renters.