At T&H Realty Services, a key part of our Indianapolis Property Management service is to provide our Owners with the highest degree of protection for their asset(s).
Generally speaking, we market all of our homes with a required Security Deposit equal to one month’s rent.
But we use a risk-based model. Depending on various factors such as credit score, rent to income ratio, and previous rental history, we will require either 1-2 month’s rent as a security deposit.
However, we do have some steadfast rules: If the credit score is between 580-669 the deposit will be 2xs the amount of rent. If the credit score is 670 or above the deposit will be 1xs the amount of rent. Pending all other requirements have been met.
In addition, we view Security Deposits the same way a bank views interest rates: the better qualified the tenant, the lower the Security Deposit we’ll probably need. For example, if we screen an applicant who boasts a 750 credit score, has an income-to-rent ratio of 20%, and is asking for a reduced deposit, we might be willing to negotiate.
However, if we screen an applicant with a 550 credit score and an income-to-rent ratio of 30%, we will obviously require a higher deposit to offset the inherit risk of the applicant.
We firmly believe that you should never charge less than 1 month’s rent, no matter what.
While there are no guarantees, our experience shows that by providing a flexible Security Deposit system, we serve the interests of both our Owners and Tenants.
