Folsom Property Management Blog

How Much Should You Charge for Security Deposits in Folsom, California?

How Much Should You Charge for Security Deposits in Folsom, California?

Picture this:

You recently bought a rental unit and have a tenant. Six months in, the tenant moves out. You go to prepare the unit for the next tenant and you're met with a horrific scene: scratched walls, broken taps, missing name it.

A quick calculation and you figure you'll need about $8,000 to restore the unit to its original condition. You're staring at a big loss -- unless the tenant has paid a security deposit that's at least that amount.

Security deposits protect landlords from financial loss in the event of property damage and/or unpaid rent and utilities. But how much should you ask your tenants to put in as security?

This guide has answers for landlords in Folsom, CA.

Maximum Security Deposit in Folsom

California's security deposit law is clear on the maximum amount landlords can ask renters to pay. It depends on whether the rental is furnished or unfurnished.

For unfurnished rentals, you're allowed to charge a maximum of two months' rent. For furnished rentals, you can collect up to three months' rent.

Are there any exceptions?


If you're renting to an active service member, you can only charge up to one and two months' rent for unfurnished and furnished apartments, respectively.

Also, keep in mind that in California, security deposits are not non-refundable. However, you have the right to keep all of a tenant's security deposit if the situation warrants it.

Best Practices for Setting Your Security Deposit Amounts 

Just because the law allows you to charge up to two or three months' rent as a security deposit doesn't necessarily mean you should go for the maximum.

The reasoning is simple. Maximum deposit increases the amount of money a renter needs to part with before moving in. This can make your rental unaffordable to a sizeable number of prospective renters.

For example, if you have a furnished rental going for $2,500, a new tenant will need to pay $10,000 in full, assuming you're asking for three months' rent. At a time when 51 percent of Americans earning over $100K annually (your target market) are living paycheck to paycheck, not many people will have $10K lying around.

Here are the best practices you should observe when calculating an optimal security deposit:

  • Consider what other landlords with similar-specked properties in the area are charging
  • Bear in mind the market value of the property and local real estate market conditions
  • If you have a furnished rental, take into account the quality of the furnishings
  • Assess the risks associated with each prospective tenant. Tenants with dog pets, for example, post a greater property damage risk than those without pets.

Security Deposits: There's No Room for Error

It's your job to set security deposits for your rental property. In Folsom, CA, there's a law that spells out the maximum amount you can charge. However, there are other crucial factors you need to consider before setting the amount.

If you're struggling with this matter, it's high time you hired a property management company. Residential Equity Management is committed to helping landlords in Folson make the most of their investment.

Contact us to discuss your needs.