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So you've finally invested in your first rental property. You're ready to start bringing in new tenants and making a steady secondary income. Now what?
Do you know how to get started with tenants? More specifically, do you know all about security deposits?
Most new landlords only know about security deposits from their experiences as tenants. They know that they've had to pay these deposits in the past, but they don't understand the basic ins and outs.
We're here to talk all about collecting security deposits. Read on to learn more.
What Is a Security Deposit?
A security deposit is an extra sum of money that landlords can collect from tenants when they sign their lease. It's important for you to mention the security deposit on the listing for the rental property, so potential tenants know that they're able to pay it upfront.
But why bother with a security deposit?
A security deposit protects both you and your tenants. On your end, a security deposit acts as a damage deposit. If something were to happen to the rental home during your tenant's time there (as a result of their actions), the deposit can cover any repairs or professional cleaning.
For the tenants, the security deposit stops them from having to pay for small amounts of damage out of pocket. They also get the deposit back later, which they can use when they get their next lease.
Is There a Limit on Security Deposits?
In the state of Florida, there is no current limit on security deposits. In theory, this means that you can charge as much as you'd like.
With that in mind, it's in your best interest to not set the security deposit any higher than two times the cost of rent. Most landlords set the security deposit at the same price as the rent, so you have to compete with them.
A tenant is less likely to apply to your rental property if the security deposit seems unreasonable.
Do You Have to Return a Security Deposit?
Security deposit laws dictate that you must return a security deposit within 15 days of the end of the tenant's lease as long as the tenant has paid their rent and left your property in good condition. All security deposits are refundable.
The only reasons that you can keep the security deposit are:
- Unpaid rent
- Violations of the lease agreement
- Property damage
Property damage is different from normal wear and tear. It's normal for homes and apartments to degrade slightly during your tenant's stay. Your tenant is not responsible for minor issues.
That's Your Quick Guide to Security Deposits
Security deposits aren't complicated once you understand the basics. Remember: the security deposit is for both you and your tenant. It's there to cover potential damage, so you and your tenant don't have to pay out of pocket.
If you need help managing your property, we want to talk to you! Contact our property management professionals at HomeRiver Group so we can start working together today.
