In the United States, 42% of rental properties are run day to day by the owners of that property.
If you’re one of those who are trying to do everything on your own, don’t underestimate the value of a security deposit. A security deposit is essential and should be part of your lease agreement. Never let a tenant move in without providing a security deposit and the first month's rent.
Why is it so important to have a security deposit? Let’s take a look at some reasons why you should never overlook it.
1. Money For Repairs
It may seem redundant but one of the benefits of having a security deposit is security. It helps ensure that you will have the money you need in case your tenants do damage to the property. This money can help you finance repairs so you can replace the tenants without issue.
2. Protect Against Early Termination
A key component of the lease is a time limit that is agreed upon by both parties when the lease is signed. Having a tenant leave early can cost you money as your unit will sit empty. Security deposit collection can help offset that cost, and convince the tenant to stay until the end of their contract.
3. Cleaning Fee
While you can’t make a tenant use a specific cleaning service, you can charge them if you have to use one after they leave. This will not only cover the expenses, it can serve as a reminder to your tenant that if they want their security deposit back, they will have to clean the property.
4. Good Faith
A benefit to having move-in costs that include a security deposit payment is to ensure good faith. The tenant is proving good faith by providing you with a deposit. The security deposit fee should be between one and three months' rent in this case.
5. Security Deposits Help Preserve Quality
If you have a nice, or high-end rental, you want to make sure it stays that way. Charging an appropriate fee is allowed in the Dallas/Ft Worth, TX area. If you aren’t sure how to budget this you can look into having a property management company assist you.
This payment is a clear sign that you intend to restore the quality of your unit no matter what the tenant does. Just remember, the fee isn’t going to cover everything if you get a bad tenant, which is another reason why you should consider a property management firm.
Security Deposit and Your Property
There are regulations that are specific to a security deposit that you should know about. Do your research and determine how best to proceed with charging your tenants. Make sure that you are following all applicable local laws.
If you’re unsure of what the laws are in the Dallas/Ft. Worth area, simply contact us. The HomeRiver Group can start taking care of your property and make sure you aren’t making a mistake that could cost you.