Your good tenant’s lease is coming up for renewal. They pay on time, they take care of the place, and they want to stay another year. Somewhere in the back of your mind is a thought a lot of Illinois owners have: should I raise their security deposit at renewal while I have the chance?
It feels responsible. More cushion, less risk. But for a tenant you already trust, the answer is usually no. And the right answer depends heavily on where your property sits.
The friction almost never pays for itself
Think about what you are actually asking. A paying, on-time tenant who has done nothing wrong is being told to hand over more cash to keep the home they already live in. That lands as a penalty for being a good tenant.
Retention is where owners quietly make or lose money. A renewing tenant costs you nothing. A turnover costs you a vacancy, a make-ready, a listing push, screening time, and often a rent concession to fill the unit. Push a good tenant toward the door over a few hundred extra dollars of deposit and you can spend far more than the cushion was ever worth. If you want a sense of what your property should be earning either way, a free rental analysis is a good place to start.
Chicago properties: we use a move-in fee, not a security deposit
This is something many first-time Chicago landlords do not know coming in. For properties in the city of Chicago, we do not collect a security deposit at all. We collect a move-in fee instead.
Here is why. Where Chicago’s Residential Landlord and Tenant Ordinance applies, holding a security deposit comes with strict rules: separate bank account, interest owed to the tenant, specific written receipts, and hard deadlines for returning the deposit with an itemized statement. The penalties for getting the mechanics wrong are steep, and they do not care that you meant well.
A move-in fee sidesteps all of that. It is nonrefundable up front, so there is no tracking, no interest calculation, and no end-of-tenancy accounting required. The owner receives the move-in fee directly. We do not take it. You get the money, you keep it, and you never have to think about it again when the tenant moves out.
So for a Chicago property at renewal, the question of “should I raise the security deposit?” does not really apply. There is no deposit. The fee was collected at move-in. You can read more about how we run city rentals on our Chicago property management page.
Suburbs: when to hold the line at renewal
Suburban properties, where the Chicago ordinance does not apply, do use security deposits. And at renewal, the right move is usually to leave the deposit alone unless something material has changed.
When there is a security deposit, the owner holds it. Not us. You receive it, you hold it in your account, and at move-out you handle the reconciliation. We handle the management. The deposit is yours to steward.
Raise the deposit at renewal only when the risk profile has genuinely shifted, for example:
- The tenant is adding a pet and you allow pets with a higher deposit
- There is a documented history of late payments or a repair issue you had to chase
- Another adult is joining the lease and the household is materially different
- You are correcting a deposit set significantly below market at move-in
Notice what these have in common. They are all real changes in risk, not just an owner reaching for more cushion because the calendar came around. If nothing about the tenant or the household has changed, the deposit probably should not either.
The better move for a good tenant
Whether your property is in Chicago or the suburbs, the math on a good tenant is the same one we started with: keeping them in place is almost always cheaper than the friction of pushing them out. Turnover is the expensive event, not the renewal.
If you have a tenant worth keeping, protect the relationship. A modest, well-explained rent adjustment that keeps you at market usually does more for your long-term cash flow than squeezing more money out of someone who has earned your trust.
How we handle this for owners
At MF CashFlow, we structure the move-in fee correctly for Chicago properties so owners receive that money cleanly and without compliance exposure. For suburban properties, we look at each renewal on its own facts and only recommend a deposit change when the risk actually justifies it.
The goal is never to nickel-and-dime a good tenant. It is to keep your units occupied by people who pay and stay, with clean paperwork underneath the relationship.
If you own rentals in Chicago or the south suburbs and want a second set of eyes on your renewals, we are happy to talk it through. Book a call at cal.com/mike-f/30min or visit mfcashflow.com.
At MF CashFlow, our business model is your cashflow.
Mike Fisher
Illinois Licensed Real Estate Broker
M Property Group LLC | New Lenox, IL
mfcashflow.com | (708) 719-0977
