Are you planning on getting started with investing in rental properties in Monterey County, or elsewhere in the United States? If so, one of the most important aspects of your business will be collecting a security deposit from your renters.
If you’re unfamiliar with security deposits this article will provide you with information on security deposits so you understand best practices for security deposits, security deposit amounts, and how to handle the security deposit return.
Best Practices for Security Deposits
When it comes to security deposits, they can without a doubt be one of the most contentious aspects of any owner’s life because many people don’t understand how to deal with the issue of security deposits correctly.
What is a security deposit? It’s the money that’s collected at the beginning of the lease period, the total security deposit will typically include: cleaning deposit, first months rent, last months rent, pet deposit and any other deposit that an owner or landlord may require from their tenant.
Some of the best practices for security deposits that you should consider include:
- Always require a new tenant to fully inspect the property before moving in then have them sign off on the inspection report. This will help to avoid problems later if the tenant chooses to not pay their rent due to the condition of the rental.
- Make sure the security deposit is paid before the tenant is allowed to move in, not later.
- Keep all security deposit money in a separate bank account that can be withdrawn when needed. This will eliminate the possibility of spending the security deposit before the tenant moves out.
- If work needs to be done on the rental property after the tenant moves out, you should save your receipts just in case your former tenant challenges the amount you returned by taking you to court.
Security Deposit Return
The security deposit return can literally be a “sticky situation” because some owners have taken advantage of their tenants in the past.
To avoid problems with the security deposit return you should make sure that every aspect of the move out inspection is thoroughly documented. This will eliminate accusations from your tenants if you have to use some of their security deposit for cleaning and or repairs.
Just make sure that you save receipts and invoices though just so you can properly protect your best interests if your former tenant takes you to court over the security deposit return.
Contact 36 North Management
To learn more about security deposits, or to speak with us about our property management services contact 36 North Management today by calling us at (831) 484-4604 or connect with us online.