About 70,000 new renters have come to the Dallas-Fort Worth area, and they're all looking for fantastic rental properties. Are you ready to start welcoming tenants?
Being a landlord can be challenging, but one aspect that's fairly straightforward is collecting security deposits. They might seem complicated if you're new to property ownership, but we're here to make them simple!
Read on to learn all about security deposits.
What Are Security Deposits?
A security deposit is a sum of money a landlord can collect at the beginning of a new tenant's rental period. Generally speaking, the landlord will ask for the first month's rent alongside the security deposit.
So what's the point of a security deposit?
Security deposits benefit both tenants and landlords. On the tenant's side, a security deposit secures the rental property so the landlord can't offer it to someone else last minute. It also covers any potential damage so the tenant shouldn't have to pay out-of-pocket if something goes wrong.
Tenants also know that the security deposit will come back to them later, so they'll have money to put toward their next rental or mortgage payments.
For landlords, security deposits, again, cover rental damages. Even the best tenants can accidentally damage property.
Security deposits also prove that a tenant has enough money to cover rent. If they're able to pay a larger sum from the get-go, it's a good sign that they'll be reliable.
Are There Limits Regarding Security Deposits?
In Texas, there are no limitations on how high you can set your security deposit. Keep in mind that this is true at the time that this article is being written. It's best to keep up with current laws and regulations in the event that anything changes.
While there's no official limit, there are a few things that you should consider when you're deciding how much to charge.
You want to stay competitive with other property owners. If you charge double the cost of rent for your security deposit, and another landlord with an equivalent property only charges the cost of one month of rent, tenants will go with the other property.
We recommend staying at or near one month of rent for your security deposit and not exceeding double that.
Can You Ever Keep a Security Deposit?
In most cases, security deposits are refundable. You have thirty days from the time the tenant leaves the property to return the security deposit. If you don't, you can be heavily fined if the tenant chooses to take legal action.
The exception is if the tenant has somehow caused damage to the property or breached the lease.
The tenant is not responsible for normal wear and tear. This means that small issues such as faded carpets, scratched paint on the walls, minor dirt, and small problems with appliances or plumbing can not be held against them.
If you choose to retain some or all of the deposit, the tenant can request an itemized list of damages.
Don't Forget the Importance of Security Deposits
Security deposits are a fact of life for every landlord or renter, but luckily, they're not complicated! As long as you set a reasonable price and make sure to return the deposit when your fantastic tenants leave, you'll have no trouble.
Managing a rental property is more than just collecting rent. If you're in need of help, why not hire a rental property management company?
At Homeriver Group, our team is ready to help Dallas landlords. Contact us so we can start working together today.
