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How
to Manage Rental Security Deposit Like a Pro
Lease Security Deposit PART 1
The
battle over rental security deposits has raging between landlords
and tenants since time immemorial. Whether you are collecting, holding
or returning lease security deposits, turn to our complete guide below
for an unfair advantage.
First Things
First... Getting Down to the Must-Know Security Deposit Basics
From
the way security deposit rules see it, the rental security deposit
is your tenant's money and you are merely a safe keeper.
It's Not
a free loan or the last month's rent paid in advance. You get to hang
onto
the deposit for a while because it gives the tenant a very solid reason
to play nice according to the rules of the lease. Rogue landlords who
hold the deposit ransom and threaten their tenants (to do things
outside the law or lease agreement)... will find themselves in very hot
soup.
Most landlords won't think twice about demanding tenants
for a lease security deposit, but in case you are still undecided ...
we strongly recommend that
you go for it. The humble security deposit is often a landlord's
most dependable and accessible protection against rental losses -
Without a deposit, some people won't even consider renting out their
properties in the first place.
So
why do some landlords still play the dangerous game of no deposit
renting? Here are some standard reasons (and why we think
they're
not good enough):
"I have more tenant applicants if I don't ask for
deposits"
- While having a larger pool of potential tenants is indeed a good
thing, what a landlord really needs is one well-qualified tenant... and
not a whole bunch of shady ones. Think about it: Do you really want to
hand over your property keys to a stranger who's unable or unwilling to
fork out a rental security deposit?
"Collecting security deposits is just too much hassle. I can't be
bothered with all the security deposit rules and paperwork."
- Hearing this excuse never fails to make me gasp in shock. Why someone
would rather risk ending up in small claims court to recover losses
than to fill up a few simple forms is just beyond me.
"I'm renting to friends and relatives, so it's not nice to ask for
deposits"
- This reason actually makes sense... if you are running a shelter. If
putting a roof over their heads comes first and they simply can't
afford a deposit, then be our guest and go right ahead. Otherwise your
loved ones, of all people, should understand why you need to ask them
for a rental security deposit.
Then How Much
Rental Security Deposits Should You be Asking for?
Deciding
on your security deposit amount is like performing a fine
balancing act - On one hand, you don't want potential tenants to run
screaming from your monster deposit demands. On the other hand, you
will want to collect enough so you can sleep well at night.
So
what's the magic figure for a lease security deposit? There's no
hard-and-fast answer, but 1 month's rent is often a good place to
begin. (Depending on where you are, the typical security deposit amount
can be as low as 2 week's rent and stretch up to 2 months).
For
starters, 1 month's rent happens to be the standard security deposit
amount in
most areas so you won't have a riot on your hands. Plus you are Not
likely to run afoul of security deposit rules since even the most
tenant-friendly states in the U.S. will still allow landlords to
collect a maximum deposit of 1 month's rent.
Is
your rental place well-furnished or just well in demand? Are you
renting to someone with five puppies or just a really big live-in
family? Then you may have just found a good reason to raise the lease
security deposit. Using the same line of logic, it does make sense for
you to lower the deposit if your rental place is bare-thread or you are
fighting to win over some first-rate tenants.
Important:
Before you finalise the security deposit amount and seal it in writing,
be sure to Click here to confirm
what are your state security deposit laws for the maximum deposit
limits. - Take your time, we will be here waiting when you
return.
Now
that you have the perfect security deposit amount nailed down,
uncover what is the best way to hold, deduct and
return rental security deposits:
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