I think the answer is "depends". Over all, without further info, either approach is normal and nobody would consider your policy unusual.

And of course there's always special considerations such as: maybe you are not completely comfortable with your tenants credit-worthiness. In which case you could ask for extra money by the pre-pay of last month rent. OR not rent to them at all to avoid trouble...

If you do take last month rent, I think there's special handling - you are not allowed to deposit it into your own account. Keep it on the side, same place as the special bank account you have set up for security deposit.

Posted by: sweethome at October 1, 2007 8:58 AM in response to Security deposits

1st and two months security.

The security is harder to get back if something goes wrong.

Posted by: guest at October 1, 2007 9:13 AM in response to Security deposits

Isn't it true that if your house is a 3-family or less, you don't have to deposit the security in a special account? I'll be renting two apts. in a owner-occupied 3-fam and I wasn't intending on placing the security in a special account.

Posted by: faithful at October 1, 2007 12:04 PM in response to Security deposits

There are no hard and fast rules. Some useful suggestions would be, most definitely to check creditworthyness of tennents. Very easy to do and will give you some insight into the people you are renting to at very little cost.

Two months deposit as well as first months rent is not unreasonable. If it's a good apartment renters will put up the money.
You may also want to note to tennants that if they dont pay on time you will report them to a credit agency. This may make them more reliable.

Something we did was to offer an apartment at slightly higher monthly rent but to offer a cleaning service monthly. This should prevent the place from being left in poor condition.

Worth looking on the web site www.completelandlord.com. Some handy tips on there.

Posted by: guest at October 1, 2007 1:23 PM in response to Security deposits

Also,

Pay $20 to download a rock solid rental contract

Google "rental contract forms"

or heres a free one

http://www.totalrealestatesolutions.com/realestateforms/html/RentalContract.html

Posted by: guest at October 1, 2007 2:19 PM in response to Security deposits

First month plus two months security. I used to only collect one month. Tenants would withold last month rent leaving me with no recourse if there are repairs. Two months from now on.

Posted by: guest at October 1, 2007 2:56 PM in response to Security deposits

2:19 - The forms have to be for NYC, otherwise they are not "rock solid". The one you linked to for example contains a clause in conflict with NY "Roommate law" and is not enforceable.

Posted by: guest at October 1, 2007 4:46 PM in response to Security deposits

You don't have to put money in a special account for buildings with 3 or less apartments. Over 3 would be considered commercial and other laws come into effect. But, I believe that under the law you are required to tell the tenant where his money is deposited and they may have some rights to see statements. Check with a not-for-profit landlord/tenant rights attorney for clarity. Most potential tenants will not know all of their rights under the law.

Posted by: guest at October 1, 2007 4:48 PM in response to Security deposits

It's best to get the First Month, Last Month and Security equal to one months rent. This way you are covered. So many tenants think that Security is the same as last months rent, it's not. Having three months up front covers all the bases.

Posted by: Rick at October 1, 2007 8:43 PM in response to Security deposits

I definitely endorse collecting First, Last and Security (equal to one month, or more if you allow pets). Learned this the hard way: our last tenants -- of course they seemed like the nicest, most trustworthy people in the world -- gave us less than a week notice that they were vacating the unit and we were left scrambling to fill the apartment and missed out on a month of income. Even though they were clearly in violation of their lease, after looking over the laws we realized we couldn't keep their deposit because they hadn't damaged anything in the apartment. If we had collected the last month's rent in advance we would have been covered.
Requiring 3+ months cash upfront also seems to help separate out the people who can't quite afford to rent your apartment, so you don't have as much work trying to determine which tenants are qualified.

Posted by: gowanusaurus at October 2, 2007 10:04 AM in response to Security deposits

gowanusaurus: You need a better lease! If you lose rental income when someone breaks a lease, you are certainly entitled to recoup that. The previous tenant is responsible for covering the rent until you find a new tenant. Use the lease in the NOLO book...

Posted by: carrie m at October 2, 2007 10:32 AM in response to Security deposits