41% of renters expect to get their security deposit back after the completion of their rental time.
But what is a security deposit? It is a financial agreement that renters must adhere to by giving up rent in case of damage to the property while living there. If there is no damage, the renter will get this money back.
However, there are some steps to follow as a landlord to ensure you are covering your bases.
1. Use a Written Agreement
The most important thing you can do when you are collecting and managing someone else's money like a security deposit is to use a written agreement. In other words, you should have a contract.
The written agreement should specify the terms and conditions of the security deposit, including the amount, the duration of the tenancy, and the conditions under which the deposit will be forfeited. This should be made clear because there can be a lot of disagreement when it comes to what can and cannot cause someone not to get their security deposit back.
This agreement should be signed by both the landlord and the tenant. If you use a property management company, they may be able to provide you with a contract.
2. Use a Separate Account
As a landlord and property manager, you need to keep a security deposit in a separate account whether it is a business account or a personal account.
While you may think that you have your budget and accounts under control, there may be a time when you become confused about what is yours and what is the security deposit. But keeping your account separate will prevent any confusion of this nature from happening.
Additionally, many states actually require landlords to keep a security deposit in a separate account. It is best to read up on these laws.
3. Document the Condition of the Property
Collecting a security deposit is a great idea as a landlord. However, there are steps that you need to take before you collect for the process to actually work.
Before the tenant moves in, you need to inspect the property for what it looks like and assess for any damage. Take photos or videos of the condition of the property. This way, you have evidence and proof of what the property looks like before the new tenant moves in.
Collecting and Managing Security Deposits
Being a landlord can be quite difficult and time-consuming, especially when it comes to understanding security deposits. Learning the ins and outs of what it means to be a landlord and the steps you have to take day in and day out can be confusing. However, you do not have to do it alone.
If you are already a landlord or are thinking about becoming one, we want to help you! At Verandah Properties, we know the ins and outs of the industry to help you be successful as a landlord.
You can contact us today with any questions you may have about getting started!