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5 Reasons Your Security Deposit is So High

(And How to Make it Lower)

June 22, 2017 | by
Reviewed by real estate expert Michael Colacino

When leasing office space, it’s often difficult to know how large a security deposit is fair or what to expect. Especially if you’ve never been through the process before.

Every landlord has different requirements and preferences for leasing their space, but here are a few factors that can increase security deposits.

  1. You’re a Small Business

    While large organizations have reputations to fall back on, your small startup does not. Remember the Internet boom of the 1990s? And remember how it burst a few years later? Your landlord is looking at your company in terms of risk. Don’t take it personally if he wants to limit his exposure with a larger security deposit.

    If you don’t have an established reputation or excellent credit to fall back on, one asset you can use to make your case is a credible broker. If she already has a solid relationship with the landlord, she might be able to negotiate some flexibility on the security deposit.

  2. You Asked for Tons of Improvements

    When a landlord is asked to make a ton of improvements to a space before you even move in, they’re more likely to ask for a larger security deposit. If you have the time and energy, spruce up the place yourself and save money on the security deposit.

  3. You Didn’t Negotiate

    They say never accept a first offer, and the same is true for security deposits. There are many ways you and your broker can negotiate with a landlord.

    You could have your bank issue a line of credit. Offer to pay a few months of rent in lieu of a security deposit. It’s also helpful to have leverage in the form of another office rental with a lower security deposit waiting in the wings. Make sure you negotiate everything upfront, with help from your trusted broker.

  4. You Didn’t Do Your Research

    Security deposits can be 3-6 months of rent, depending on the landlord and your credit. If you paid any more than that, now you know when it’s time to negotiate your next lease.

  5. You Don’t Seem Credible

    If you’re not filling out your applications properly, not providing accurate information about your real estate past, or can’t provide references, the landlord may worry you can’t pay your rent on time. Triple-check every part of your lease application and work with your broker to ensure an organized process.

As you might have guessed, a key partner in all this is your broker. She has the relationships with landlords and understands the nuances of negotiation.

When you arm yourself with basic knowledge of the leasing process, you can lean on her expertise with even more confidence.

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