Handling Tenants Security Deposits

1. Determine the amount – most landlords require one or two months rent up front as a security deposit. However, it is different for every landlord. It is important that your amount for your security deposit be determined by what you think you would need in order to cover a major damage as well as what your tenants can afford to pay up front. Requiring too large of a security deposit can potentially decrease your chances of finding tenants, depending on what their current level of income is.

2. Do not commingle funds – as a landlord, it is important that you do not commingle your security deposits with your personal funds. When you are dealing with other peoples’ money, it is best to have separate accounts for those funds so that you don’t end up accidentally spending some of it because it was mixed in with your personal funds.

3. Know what your state requires – every state has different requirements when it comes to rental properties and security deposits. Some states require that interest is accrued on tenants’ security deposits. It is important that you look up the requirements for your state and implement those requirements into how you will handle your security deposits.

Keeping these things in mind will really help you as a landlord to keep things organized as your handle your security deposits. If you would like more information on how you can best manage your security deposits, it may be helpful to either talk to or hire property managers for your rental properties. A property manager will oversee and manage the critical tasks for your rental properties such as finding tenants, taking and managing security deposits, making sure rent payments are made on time, keeping the property in top-notch shape, and managing communication between you and your tenants. If you feel that it would be a good investment for you to hire a property management company to take care of these tasks for you, Authority Property Management does property management in Redding and would love to help you!