Everything You Need to Know About First and Last Month’s Rent

Renting an apartment often requires more than just searching rental listings, picking one, applying, and getting approved. You must also demonstrate your ability to afford the unit by paying upfront costs that take it off the market and secure it in your name. A typical upfront cost is the first and last month’s rent, and what you pay may depend on the property owner or manager and the city and state where you live.

Learn everything you need to know about paying your first and last month’s rent, what property owners use the payment for, and how it differs from a security deposit in this overview. Discover the pros and cons of living in a rental that requires first and last month’s rent upfront.

Why do you have to pay first and last month’s rent?

Not all property owners or managers charge prospective renters first and last month’s rent. But some do to ensure you pay the final month of your lease. You may also have to pay a security deposit to take the unit off the market and secure your place.

How do first and last month’s rent payments work?

First and last month’s rent covers your rental dues and establishes you as a tenant in the rental unit. Your property manager may collect your last month’s rent and apply it to the balance of your final month in the lease so you don’t have to pay.

Your property manager may request a security deposit instead of last month’s rent. A security deposit is used to pay for any damage in the apartment after you move out. If that’s the case, you will get the remaining balance of that deposit back. However, if you don’t need to pay for any damage, then you will get the whole security deposit back.

Some property managers use the security deposit as your last month’s rent. In that case, they can only use it for that purpose and not for completing any repairs after you move out. If there is damage, the manager or property owner would pay for those expenses, not you or your security deposit/last month’s rent.

Check your lease and review the purpose of your upfront payments to make sure you understand what you’re paying and what the property owner is going to use it for. Remember to clarify the details with the property owner.

Is first and last month’s rent the same as a security deposit?

First and last month’s rent is different than a security deposit. Property owners can only use security deposits to:

• Pay for fixing damage to the unit sustained during the renter’s lease
• Pay for the last month’s rent

Renters use first and last month’s rent to:

• Pay the first and last month of rental dues before they move in and before or upon moving out
• Begin and finish out their lease

Pros and cons of renting apartments that collect first and last month’s rent

Paying a lot of money upfront for a place may not seem like a good thing at first. Fortunately, there are some pros to choosing a rental property that requires first and last month’s rent. Those pros include:

• Property owners that require first and last month’s rent tend to value taking care of their units, meaning they’re likely nice, well-kept places to live.
• There may be fewer applicants to compete against for a unit than usual because of the higher upfront costs.
• Suppose you are required to pay a security deposit, and you live in a state where property owners must place it in a particular account, such as a savings or escrow account. In that case, you’ll earn interest on the deposit and could get more than you paid back, depending on how long you live in the unit.

However, there are some drawbacks to consider, too:

• You must pay two full months of rent upfront to move in, which can be too much for some renters. If the property owner requires a security deposit in addition to the first and last, you’ll likely have to pay three months’ worth of rent. Some states prohibit property owners from collecting more than two months’ rent. Be mindful of this law to avoid paying too much.
• A place that requires first and last month’s rent in an area where it’s rare for properties to do so may be out of your price range.

How to account for first and last month’s rent

Here is a step-by-step guide on how to account for first and last month’s rent:

1. Understand the terms Familiarize yourself with the terms of your lease agreement to determine if first and last month’s rent is required. Make sure to read through the lease carefully and note any specific instructions regarding the payment and use of these amounts.
2. Calculate the cost Determine the total amount you need to pay for first and last month’s rent. This can be done by multiplying your monthly rent by two. For example, if your monthly rent is $1,000, the total amount for first and last month’s rent would be $2,000.
3. Budget accordingly Adjust your budget to accommodate the upfront payment of first and last month’s rent. Take into consideration any other financial obligations you have and ensure that you have sufficient funds to cover this expense.
4. Plan for security deposit Remember that first and last month’s rent is different from a security deposit. Account for the security deposit separately and be aware of any additional costs associated with it. Some landlords may require both first and last month’s rent as well as a security deposit.
5. Set up a separate account Consider creating a separate savings account or setting aside funds specifically for your first and last month’s rent. This can help you keep the money separate from your regular expenses and ensure that it is readily available when needed.
6. Time the payment Coordinate with your landlord or property manager to determine the timing of the payment. They will provide instructions on when and how to submit the payment for first and last month’s rent. Ensure that you adhere to the agreed-upon timeline to secure your rental unit.
7. Keep documentation Retain copies of any receipts or payment confirmations related to your first and last month’s rent. These documents can serve as proof of payment and may be required for future reference or disputes.
8. Understand refund policies Inquire about the refund policies for first and last month’s rent. Clarify whether the last month’s rent will be used as a security deposit or applied to your final month’s rent. Understand the conditions under which you may be eligible for a refund or partial refund at the end of your lease.

By following these steps, you can effectively account for and manage the payment of first and last month’s rent, ensuring a smooth rental process and financial stability.

What is the meaning of one-month advance rent?

One-month advance rent is a payment that covers one full month’s rent. It’s a means for property owners to secure serious tenants committed to renting the property. The stipulations depend on the property owner or manager. Depending on the lease agreement, this advanced payment may not be refundable. However, it can establish a good relationship between you and the property owner.

Can the property manager increase the first and last month’s rent?

If you have a fixed-term lease, the property manager typically sets the first and last month’s rent amount at the beginning and cannot increase it during the lease term. However, property managers may adjust the rent for subsequent lease terms. It’s essential to clarify any rent increase policies before signing the lease.

Can a property manager ask for first and last month’s rent plus a security deposit?

Depending on the state where you live, a property owner or manager may not collect first and last month’s rent plus a security deposit. Some state laws prohibit property owners from collecting more than two months’ rent from you before moving in. These renter’s rights laws help stop property owners from taking advantage of tenants and asking for excessive payments. If your state has this law, you should only expect to pay first and last month’s rent or the first month’s rent plus a security deposit.

Other commonly asked questions about upfront rental costs

Here are some additional FAQs and answers to help you fully understand first and last month’s rent:

First month’s rent pays for the first month’s rental balance. It also fully secures you as the renter in the lease and unit.

If your property manager collected last month’s rent as part of your upfront fees, you likely don’t have to pay rent for the last month of your lease. That’s because the property manager is meant to apply this money to those dues, whether or not you stay through the end of your lease. If you paid a security deposit, check your lease agreement and contact the property manager to see whether they’re using the deposit to repair damage after you move out or to cover last month’s rent.

Unfortunately, you will not get last month’s rent back at the end of your lease if you pay it upfront. The property owner applies that money to your last month’s rental dues.

No, you don’t always have to pay first and last month’s rent. Each rental situation is unique. Your property manager determines the type and amount of upfront costs you pay.

The first and last month’s rent is typically only refundable if specified in the lease agreement. Property owners may apply last month’s rent toward any unpaid rent or damages and not return the remaining balance to you. It’s crucial to review the lease terms and understand the policies regarding refunds.

In most cases, the security deposit cannot be used as last month’s rent. The security deposit serves a different purpose—to cover any damages beyond normal wear and tear or unpaid rent. Using the security deposit as rent may result in penalties or eviction. Always check your lease agreement for specific guidelines.

Some landlords may offer alternatives to paying both the first and last month’s rent upfront. They may provide options such as paying in installments or using a guarantor or cosigner. However, these alternatives may vary depending on the landlord and property management policies.

The last month’s rent is typically meant to cover the final month of occupancy and cannot be used by the landlord for repairs or maintenance unless otherwise specified in the lease agreement. Any repairs or maintenance expenses should be separate from the last month’s rent payment.

Legal regulations regarding first and last month’s rent vary by jurisdiction. Some areas may have specific laws governing the amount, use, and refundability of these payments. It’s important to familiarize yourself with the local rental laws or consult legal advice to understand your rights and obligations.

Usually, you cannot use the security deposit as last month’s rent. The security deposit serves a different purpose—to cover any damage beyond normal wear and tear or unpaid rent. Using the security deposit as rent may result in penalties or eviction. However, the way the deposit is used is at the property manager’s discretion. Always check your lease agreement for specific guidelines.

Final thoughts

It’s always a good idea to ask your property owner or manager about upfront costs so you know what they expect you to pay. Typically, you should only pay two months’ rent before moving into a rental unit. Review the lease agreement before signing to ensure first and last month’s rent payment terms are clear and there are no additional costs. Familiarizing yourself with the lease terms also helps you understand what the property manager uses the payments for and whether they’re refundable when you terminate your lease.

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