Understanding Costs: Move In fee vs Security Deposit, and Legal Insights

This article breaks down the differences between move-in fees and security deposits, offering essential legal insights for renters. Learn to budget for your move and avoid unexpected costs with our comprehensive guide.

Nichole Stohler
Last Updated
April 10, 2024
Understanding Costs: Move In fee vs Security Deposit, and Legal Insights

Moving into a new place, whether it’s a cozy studio apartment, a more spacious one-bedroom, or perhaps a single-family home, involves more than just dreaming about your decor. It's about facing the upfront financial realities: move-in fees, security deposits, and the first month's rent. 

These costs, levied by landlords before the move-in date, serve various purposes, from covering administrative efforts in processing lease agreements to ensuring the rental property is ready for your arrival.

This article highlights these landlord charges, dissecting move-in fees versus security deposits and unpacking what typically falls under each category. Understanding these expenses, whether the non-refundable application fee or the refundable deposit held against potential damages, is key to a smooth transition to your new living space.

We'll also touch on how these costs contribute to the total moving bill, including the role of professional movers and the price of supplies for packing, ensuring you have a full view of what to budget for beyond just the rent.

With clarity on these essential costs, from the security deposits safeguarding rental properties to the move-in fees facilitating your welcome into a new apartment complex, you can confidently navigate this exciting change.

Let’s break down these details, ensuring your moving day is as seamless as expected and with no financial surprises.

What are move-in fees?

Move-in fees are one-time charges imposed by landlords or property management companies at the beginning of a rental lease agreement. Unlike security deposits, which are meant to cover potential damages to the property beyond normal wear and tear, move-in fees are generally non-refundable and cover the administrative costs associated with processing a new tenant's rental application, preparing the lease documents, and getting the property ready for occupancy.

These fees can also cover the cleaning or maintenance costs required to prepare the unit for a new tenant.

What is covered in move in fees?

The specifics of move-in fees can vary widely depending on the landlord, property management company, and location. They are more common in certain areas and in apartment complexes or rental communities managed by large property management companies.

The legality and limit of move-in fees can vary by jurisdiction, with some areas having specific regulations that cap these fees or dictate what they can be used for.

Ultimately, move-in fees help rental property owners cover the administrative expenses associated with onboarding a new tenant. Typical fees can include:

Application fee

This covers the landlord's costs of handling your rental application, which includes reviewing your application materials, processing the paperwork, conducting background checks, and determining whether you're approved to rent the unit. Application fees typically range between $30 and $75 per applicant.

First month's rent

Many landlords require tenants to pay rent for the first month upfront when signing the lease agreement and taking possession of the unit. This practice is standard and serves multiple purposes, including securing the tenant's commitment to the rental agreement.

You'll need to pay this rental amount before the landlord hands over the keys and allows you to move in. Unlike the security deposit, this payment is non-refundable.

Pet fees

Landlords with pet-friendly properties often charge a one-time, non-refundable pet or animal fee when you share your home with pets. This fee covers the additional wear and tear and potential damage that pets may cause. In addition, landlords might charge rent for your pet

Utility connection

Utility companies will most likely charge account startup fees when starting service for cable, internet, electricity, water, and garbage. You'll also need to pay any utility connection, activation, or account opening fees when establishing service.

Parking fees

If your property management company offers parking, they'll sometimes include it in your monthly rental amount. Alternatively, landlords may choose to charge an additional monthly parking fee for using spots on-site.

Depending on the location, parking can cost $50-$150 per month.  Parking fees may be paid monthly or as an upfront annual cost.

Storage fees

Some rental properties and apartments offer on-site storage lockers, closets, or rooms for an added fee. If you use these areas, expect to pay monthly storage fees or as a move-in one-time amount.

Holding fee

The holding fee reserves the unit for you and freezes it at the quoted price. It also protects the landlord if you back out of renting the property. If your application is approved, request the holding fee for your overall move-in costs.

Move in fees vs security deposit--What is the difference?

The key difference between a security deposit and move-in fee is that one is refundable, and the other isn't.

Security deposits are fully or partially refundable when the tenant moves out, as long as they did not damage the property or fail to pay rent. Legally, most states cap security deposits at 1-2 months' rent. In some states, landlords must keep security deposits in an interest-bearing account, and the accrued interest belongs to the tenant.

Move-in fees cover the landlord's administrative expenses when establishing a new tenant. They aim to defray upfront costs such as changing locks, processing paperwork, and pre-rental cleaning.

Ultimately, the tenant's security deposit helps to reimburse landlords for potential future damages or if the tenant fails to pay rent. In contrast, move-in fees cover past expenses related to tenant turnover.

Can landlords require both move-in fees and a security deposit?

It's perfectly legal for landlords to charge standard move-in fees plus a security deposit. Moreover, it's fairly common practice among large property management companies.

You may wish to consolidate the fees into a deposit. Still, landlords often view them as distinct costs that need to be handled separately since move-in fees cover administrative expenses while security deposits cover damages.

Are non-refundable fees a rental scam?

Despite being frustrating to some, non-refundable move-in fees are standard practice and generally legal. However, some unethical landlords and property managers take advantage of extra fees to overcharge tenants.

Here are some signs a move-in fee could be a scam:

  • Excessively high fees beyond market rates: Check with multiple landlords to understand typical application fees in your local market. Non-refundable fees charged by landlords typically do not exceed the first and last month's rent.
  • Refusal to provide documentation: Scam landlords may not want to put fees in writing or leave a paper trail.
  • High-pressure tactics to pay immediately: Unethical landlords may employ hard sales tactics to get payment.
  • Inability to visit the unit in person before paying: Fraudsters may make excuses as to why you can't see inside before paying fees.

The broader picture: Total personal costs of moving

After understanding the initial costs, like move-in fees and security deposits, it's important to budget for the complete spectrum of expenses involved in relocating to a new apartment. These encompass not only the one-time fees and first payments but also the personal costs that can accumulate, often unexpectedly.

Here's a breakdown to help you navigate and prepare for these expenses:

Moving and transportation costs

The physical act of moving your belongings from one place to another can vary widely in cost. Whether you're hiring professional local moving companies, renting a truck, or relying on the help of friends, there are costs associated with each. Professional movers offer convenience but at a higher price, whereas truck rental may be cheaper but requires more effort on your part.

Packing supplies

Cardboard boxes, packing paper, tape, bubble wrap, and other supplies are essential for a move but can add up costs. While some items can be sourced for free, specialized materials like wardrobe boxes or dish pack inserts will incur additional expenses.

Temporary housing

You might need to budget for temporary housing if there's a long distance or gap between leaving your old place and moving into the new one. Depending on the circumstances, this could mean a few nights in a hotel or a short-term rental.

New household items

Upon moving into a new space, you might need additional furniture, appliances, or minor renovations to make the place feel like home. These costs can vary significantly depending on your needs and preferences.

Managing your moving budget

To avoid surprises, create a comprehensive moving budget that includes these costs. Start by listing all anticipated expenses, then research and estimate each cost as accurately as possible.

How much does it cost to move-in to an apartment? The reality

Understanding move-in fees, security deposits, and the first month's rent is essential for any renter. Knowing these fees helps you budget effectively, avoid scams, and ask landlords the right questions about cost-saving opportunities.

Being well-informed lets you secure the best deal on your new rental, setting realistic expectations about the non-refundable and refundable payments involved. Consider this guide's insights during your rental search to confidently approach your next move.

By staying informed about these key expenses and how they compare to other moving costs, such as hiring movers or buying packing supplies, you'll ensure a smooth transition into your new apartment, free from financial surprises.

Move in cost FAQs

What is the definition of a move-in fee?

A move-in fee is a one-time charge imposed by landlords or property management companies at the start of a rental lease agreement. Unlike security deposits, which cover potential damages to the property beyond normal wear and tear, move-in fees are generally non-refundable and designed to cover the administrative costs associated with processing a new tenant's rental application, preparing lease documents, and preparing the property for occupancy.

This may include costs related to background checks, cleaning, maintenance, and other administrative tasks required to facilitate the tenant's move.

Is it legal to charge a move-in fee in Illinois?

Yes, it is legal to charge a move-in fee in Illinois. However, the amount and conditions under which move-in fees can be charged may be regulated by local laws, especially in cities like Chicago. For example, the Chicago Residential Landlord and Tenant Ordinance (RLTO) provides certain protections and stipulations regarding fees and deposits, including move-in fees. Landlords are advised to set reasonable move-in fees and clearly communicate these fees to prospective tenants.

Tenants should be provided with a breakdown of the fees and understand what each fee covers. Both landlords and tenants must familiarize themselves with local regulations to ensure compliance and fairness.

How much money should you have saved before moving into an apartment?

Before moving into an apartment, it's advisable to save money for the following:

  • 3 times the monthly rent: To cover the first month's rent, security deposit (typically equal to one month's rent), and any additional upfront costs such as move-in fees.
  • Additional funds for moving expenses: This includes costs for movers, packing supplies, utility setup fees, and any immediate household items you may need.
  • An emergency fund: Aim for 3-6 months’ worth of living expenses to cover unforeseen circumstances.

In total, aim to have at least three times your monthly rent plus some extra for moving expenses and an emergency fund to ensure a smooth transition and a comfortable living situation.

Important note: This post is for informational and educational purposes only. This post should not be taken as legal advice or used as a substitute for such. You should always speak to your own legal counsel before taking action.

Important Note: This post is for informational and educational purposes only. It should not be taken as legal, accounting, or tax advice, nor should it be used as a substitute for such services. Always consult your own legal, accounting, or tax counsel before taking any action based on this information.

Nichole Stohler

Nichole co-founded Gateway Private Equity Group, with a history of investments in single-family and multi-family properties, and now a specialization in hotel real estate investments. She is also the creator of NicsGuide.com, a blog dedicated to real estate investing.

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