The average mortgage payment is between $2,000 and $3,000. You can't afford to have your rental property damaged.
Renting out your property comes with a certain set of risks. Even with the best tenant screening, you never know what condition you're going to get the rental back in. For that reason, most landlords charge security deposits to protect against property damage.
In this post, we're going to give you a short guide to rental security deposits. There's a lot you need to think about when managing a rental, but you should never have to worry about property damage. Keep reading, and you'll see that this small contingency can make a world of difference during a tenancy.
How Do Security Deposits Work?
Security deposits are contingencies against property damage caused by your tenants. It's paid at the beginning of a tenancy once you've gone through the move-in inspection with the renter. As long as the property is in the same condition during the move-out inspection, the tenant gets the money back.
If there are damages, however, you can collect some or all of the damage deposit. Nearly 90% of renters pay about $600 in security deposits, but the rules on how much you can charge, where you keep, and how you can withhold the money differ depending on where you do business.
Rules for Collecting Security Deposits
In many states, there's no actual limit on how much you set your security deposit. That said, charging more than one month's rent is going to deter a lot of people from applying for your rental. Some states cap security deposits at one month, others do 2 months, and a few do 1.5 months.
There are also important rules in some places for where you can deposit a tenant's security deposit. They may require you to open an interest-bearing savings account and pay the interest back to the tenant at the end of the tenancy.
Landlord Tips for Withholding Security Deposits
The move-in/move-out inspection is an important part of the process. If you feel that you need to withhold any of the security deposit, you need to have proof that your property was damaged and receipts for how much the repairs cost.
These need to be given to the tenant when you inform them that you're withholding. If there are any discrepancies on the part of your former tenant, they may decide to take you to court. As long as you've documented everything, there shouldn't be any issues.
How Property Management Makes Managing a Rental Easier
Security deposits are an important part of maintaining your property. If a tenant knows that it's possible to lose a security deposit, they're more likely to be careful about how they treat your property.
Furthermore, they give you peace of mind knowing that you've got a contingency plan in place. Another way to ensure that your property is protected is by hiring a property management company to screen tenants, collect security deposits, and maintain the property.
If you're a Columbia, SC property owner, Home River Group is your best bet. We're a full-service property management company that can help with every aspect of running your rental property. Contact us today to learn how we can help you maximize your investment.
