Today we are talking about the security deposits; how much to collect and what to do with that deposit when the tenant moves out.
Collecting a Security Deposits
It’s always our advice to collect at least one month’s rent as a security deposit. That is enough to ensure you have a tenant commitment and to protect your property from any potential damage. It’s also not so much that you’ll put potential tenants off. When you do collect a security deposit, make sure it’s in cleared funds so the tenant can’t cancel the check after moving into your property. We recommend a cashier’s check but some people take cash and money orders as well.
Deducting Tenant Damages
After the tenant moves out, there may be some damages to the property or costs that you may want to attribute to the tenant. This is often a contentious issue between tenants and landlords, so make sure you have your evidence backed up. As soon as a tenant moves out, go in and inspect the property. Once you have performed a thorough inspection, compare that inspection to the one you did before the tenants moved in. Compare photos and that way if you are in court, you can demonstrate why you made charges to the deposit. Once you have calculated those damages, you need to put them in a written notice. Get that notice to the tenant within 30 days. If the tenant objects, you’ll be required to explain why you are holding the money, and if necessary, prove it in front of the judge in court.
Importance of Inspections
At Gulf Coast, we perform three inspections during the year so we can prove beyond all reasonable doubt that the charges we apply to a security deposit are fair and reasonable. In our capacity as property managers, we look after the interests of our landlords. However, we do caution our clients that most landlords don’t believe in wear and tear while most tenants think everything is wear and tear. It’s important to strike a balance.
If you have any questions about how to handle your tenant’s security deposit, please contact us at Gulf Coast Property Management.