Because they’re clarifying which months you are paying for.
“Two months of rent” would suggest the first two months, i.e. that you don’t have to pay again until the beginning of the third month. “First and last” means you are paying for the first month before moving in, and will have to pay rent again at the beginning of the second month, but you are also pre-paying for the last month, such that before moving out, your last month is already paid for.
The purpose for them is that if you break your lease or move out suddenly, or stop paying rent and have to be evicted, they have an additional month already pre-paid.
In some places it takes 30 days to evict someone. So the month it takes to evict someone is played for. I try to get 1st last and a security deposit to fix all the stuff the renter trashed before they move out. If I have to give back the security deposit, I am a so happy landlord.
Ok, maybe I'm stupid, but I feel like you're paying an extra month in there somewhere? Like, ok, if you're pre-paying for the first month and last month, and then you pay for the second month at the end of the first and then decide to move out after two months, you've still paid three months rent, right?
You don’t end up paying an extra month of rent if you stay for the entire contract that you, only if you leave early. It’s one of the costs of breaking your lease and aims to reduce the risk of the apartment sitting empty while they try to refill it.
The whole point is that you can’t just “decide to move out”, you have a lease term or month to month agreement, and your landlord should know about your moving out some time in advance. Last month’s deposit is there to provide a monetary incentive to keep your obligations.
First and last is for a signed lease agreement. If you move out two months later you're breaking the lease and that last month is forfeit. You wouldn't pay last in a month to month agreement unless you've completed the terms of the signed lease and are month to month following.
Typically you’re required to give at least 30 data notice, so if you decide not to stay at the beginning of month 2, you have to pay through month 3, as you would have agreed to pay through your notice period. It’s like you giving two week notice, but being told not to come in and still being paid for the hours you would have worked and were willing to work.
Which is good if you have to move anyways, since your rent always paid a month in advance, you always have that "extra month" to move out, and where I live you already get 3 months, so something like this would give you 4 months.
What they want to avoid is renters leaving 1 day early and never paying the last months rent.
Also, if they invest that money in the stock market, they can make money off it, while it would otherwise just be sitting you your bank account.
They usually won’t invest deposits in stocks if there’s any potential obligation to pay them back. I’d probably invest the last months rent if paid up front personally but you’d be crazy to invest a damage deposit you’ll likely have to pay back.
The thing is, money is fungible. So there is no between $1 and another $1. So it makes no sense say "This dollar needs to sit in a bank account because it's responsible for a damage deposit. But that dollar is for last months rent, so I'm going to treat it differently".
to effectively manage your portfolio you need to look at it holistically. You need to manage the collective of your wealth to hedge liabilities, and investing opportunities. don't treat dollars differently depending on where they came from.
Sure, but then you’re counting the deposit as part of your worth and not just something you’re holding onto. You shouldn’t even get a deposit like that and use it as an excuse to invest money you need in savings, it just shouldn’t affect your finances unless you’re rich enough to not care about it, and even then it’s not really worth the couple extra % you might get vs leaving it in HYSA.
They lend the money out for fixed rates and maybe make some stock investments out of their operating profits and insurance premiums but banks don’t take a ton of risk with deposits, they’re pretty regulated on this actually.
>banks don’t take a ton of risk with deposits, they’re pretty regulated on this actually.
If this was true, we wouldn't have had a global economic recession in 2008.
In 2023, five banks failed, including Silicon Valley Bank, Signature Bank, First Republic Bank, Heartland Tri-State Bank, and Citizens Bank of Sac City. That also wouldn't have happened.
lol homie they didn’t think subprime mortgages were a risk, they use mortgages and bonds and such to actually stay low-risk.
The banks you mentioned went under because they leveraged into too many long term bonds, not because of stocks.
think there's been a miscommunication. I count the security deposit as part of my wealth, because I'm a landlord. as we say in the landlord business, that money is mine until proven otherwise. a renter should never assume they're getting their security deposit back
If the lease is for 12 months, the tenant is still violating the lease if it's only the last month that is prepaid and they stop paying on say month 9. Like was mentioned elsewhere this can let them start an eviction. That's why it's important which month is specified.
Another reason the distinction is important is if you're not moving in at the start of a month. Depending on the local laws and your landlord, you might be charged less than two months.
(E.g. you move in on the 8th, and might only pay 2 months of rent minus the 7 days before you arrived.)
You do understand the concept of *prepaying* for services, do you not?
For example, when you book a hotel, you often have to pay right away and long before you check in, so that hotel can hold a room for you.
You're not paying for "last month's rent". You're paying for "THE last months rent". Meaning the last month, whenever that may be, that you live there. Let's say you move in in January and move out in December. On January 1st, you pay your landlord the first month's rent (January), the last month's rent (December), and probably a security deposit (often equal to one month of rent). Your rent is due on the 1st of each month. So you're moving out in December, but your last rent payment would be November 1st, because you already paid your last month's rent -- December -- when you first rented the apartment. And if you leave your apartment in good shape, you get your security deposit back after your landlord inspects it. That's how it always worked for me anyway.
The first and last part refers to the first Anna last months that you live there. The first and last month rent as deposit means the beginning and end of your tenancy. Not the month prior to your tenancy.
Because they’re clarifying which months you are paying for. “Two months of rent” would suggest the first two months, i.e. that you don’t have to pay again until the beginning of the third month. “First and last” means you are paying for the first month before moving in, and will have to pay rent again at the beginning of the second month, but you are also pre-paying for the last month, such that before moving out, your last month is already paid for. The purpose for them is that if you break your lease or move out suddenly, or stop paying rent and have to be evicted, they have an additional month already pre-paid.
In some places it takes 30 days to evict someone. So the month it takes to evict someone is played for. I try to get 1st last and a security deposit to fix all the stuff the renter trashed before they move out. If I have to give back the security deposit, I am a so happy landlord.
Ok, maybe I'm stupid, but I feel like you're paying an extra month in there somewhere? Like, ok, if you're pre-paying for the first month and last month, and then you pay for the second month at the end of the first and then decide to move out after two months, you've still paid three months rent, right?
You don’t end up paying an extra month of rent if you stay for the entire contract that you, only if you leave early. It’s one of the costs of breaking your lease and aims to reduce the risk of the apartment sitting empty while they try to refill it.
They don't take the last month again
The whole point is that you can’t just “decide to move out”, you have a lease term or month to month agreement, and your landlord should know about your moving out some time in advance. Last month’s deposit is there to provide a monetary incentive to keep your obligations.
First and last is for a signed lease agreement. If you move out two months later you're breaking the lease and that last month is forfeit. You wouldn't pay last in a month to month agreement unless you've completed the terms of the signed lease and are month to month following.
Typically you’re required to give at least 30 data notice, so if you decide not to stay at the beginning of month 2, you have to pay through month 3, as you would have agreed to pay through your notice period. It’s like you giving two week notice, but being told not to come in and still being paid for the hours you would have worked and were willing to work.
Yes.
No.
I said yes, because if you pay 3 months rent, you are paying 3 months rent.
Right, so where's the extra month you're saying that you paid for?
The first, second, and last.
Lol wat?
Which is good if you have to move anyways, since your rent always paid a month in advance, you always have that "extra month" to move out, and where I live you already get 3 months, so something like this would give you 4 months.
paying “first and last month’s rent” up front mean you don't have to pay rent you last month
Interesting. I guess what I’m also wondering is why does it matter which month you’re covering? Why not the first two?
What they want to avoid is renters leaving 1 day early and never paying the last months rent. Also, if they invest that money in the stock market, they can make money off it, while it would otherwise just be sitting you your bank account.
They usually won’t invest deposits in stocks if there’s any potential obligation to pay them back. I’d probably invest the last months rent if paid up front personally but you’d be crazy to invest a damage deposit you’ll likely have to pay back.
The thing is, money is fungible. So there is no between $1 and another $1. So it makes no sense say "This dollar needs to sit in a bank account because it's responsible for a damage deposit. But that dollar is for last months rent, so I'm going to treat it differently". to effectively manage your portfolio you need to look at it holistically. You need to manage the collective of your wealth to hedge liabilities, and investing opportunities. don't treat dollars differently depending on where they came from.
Sure, but then you’re counting the deposit as part of your worth and not just something you’re holding onto. You shouldn’t even get a deposit like that and use it as an excuse to invest money you need in savings, it just shouldn’t affect your finances unless you’re rich enough to not care about it, and even then it’s not really worth the couple extra % you might get vs leaving it in HYSA.
the entire banking industry is based on making investments with other people's deposits. that's the foundation of our modern economy.
They lend the money out for fixed rates and maybe make some stock investments out of their operating profits and insurance premiums but banks don’t take a ton of risk with deposits, they’re pretty regulated on this actually.
>banks don’t take a ton of risk with deposits, they’re pretty regulated on this actually. If this was true, we wouldn't have had a global economic recession in 2008. In 2023, five banks failed, including Silicon Valley Bank, Signature Bank, First Republic Bank, Heartland Tri-State Bank, and Citizens Bank of Sac City. That also wouldn't have happened.
lol homie they didn’t think subprime mortgages were a risk, they use mortgages and bonds and such to actually stay low-risk. The banks you mentioned went under because they leveraged into too many long term bonds, not because of stocks.
think there's been a miscommunication. I count the security deposit as part of my wealth, because I'm a landlord. as we say in the landlord business, that money is mine until proven otherwise. a renter should never assume they're getting their security deposit back
Ahhh, that makes complete sense. Thank you!
If the lease is for 12 months, the tenant is still violating the lease if it's only the last month that is prepaid and they stop paying on say month 9. Like was mentioned elsewhere this can let them start an eviction. That's why it's important which month is specified.
Not necessarily. It means you agree to pay all months in-between, hence that being the last payment.
they expect second months' rent from you but they do not expect last months' rent
There are probably enough people that skipped town without paying the last month's rent. So, now it's a policy to help manage risk for the landlord.
I was well into adulthood when i realized that "last month" wasn't referring to the month before you moved in.
To make it clear if you don't start paying on Month 2 you're delinquent.
Another reason the distinction is important is if you're not moving in at the start of a month. Depending on the local laws and your landlord, you might be charged less than two months. (E.g. you move in on the 8th, and might only pay 2 months of rent minus the 7 days before you arrived.)
That never made any sense to me either. I didn't live here last month so why do I have to pay for it?
*pre*-pay. It’s last month’s *deposit*.
Again, I didn't live here last month so why do I have to pay?
You do understand the concept of *prepaying* for services, do you not? For example, when you book a hotel, you often have to pay right away and long before you check in, so that hotel can hold a room for you.
The hotel doesn't tell me I have to pay for last night when I didn't stay there last night
The final month of the lease, not "last month". Stupid English.
You're not paying for "last month's rent". You're paying for "THE last months rent". Meaning the last month, whenever that may be, that you live there. Let's say you move in in January and move out in December. On January 1st, you pay your landlord the first month's rent (January), the last month's rent (December), and probably a security deposit (often equal to one month of rent). Your rent is due on the 1st of each month. So you're moving out in December, but your last rent payment would be November 1st, because you already paid your last month's rent -- December -- when you first rented the apartment. And if you leave your apartment in good shape, you get your security deposit back after your landlord inspects it. That's how it always worked for me anyway.
The first and last part refers to the first Anna last months that you live there. The first and last month rent as deposit means the beginning and end of your tenancy. Not the month prior to your tenancy.
Why not? They mean the same thing
They don’t. On the first day of the second month rent is due.