If you've only recently acquired a rental property and become a landlord then there's a lot you're probably still trying to get to grips with. Becoming a landlord involves a lot more work than many people expect. There are laws to adhere to, documents to file, and research to be done.
The issue of rental security deposits is something every landlord must contend with and decide upon for themselves. But there is some general guidance that's good to follow. Read on to learn tips for landlords about rental security deposits.
The Importance of Security Deposits
Not every landlord will charge their tenants a security deposit so it's up to you whether this is something you want to pursue or not. One advantage of not charging a security deposit is that it might make your property easier to rent out.
Before you make this decision, however, it's a good idea to be aware of the potential security deposit benefits you'd be foregoing if you weren't to seek this from your tenants. The purpose of a security deposit is to safeguard your property from harm.
Finding a responsible tenant can be tricky. You're essentially letting a stranger into your property and putting your trust in them to be respectful. But when you take a security deposit from them you're reducing the risk that they're going to damage your property in some way.
How Much Should You Charge?
If you do decide that you'd like to charge your tenants a security deposit your next question is going to be how much? Again, this is something that every landlord must decide for themselves.
Charging a lower security deposit can make your property a more attractive prospect for renters, so this is certainly something to consider. At the end of the day, though, the security deposit is really there to protect your interests, so if you're going to charge one you might as well make it count.
Here are a few different factors you can consider when you're trying to determine how much you should be charging. What's the rent of your property? Often security deposits are worked out as a percentage of one month's rent.
What is your competition charging? If everyone in your area is charging one rate then you don't want to overshoot this figure by too much.
You should also consider your tenant’s rental application and the results of their screening. If they appear they could be a risky choice then you might consider charging a little more for your own peace of mind.
Rental Security Deposits Made Simple
Figuring out what you're going to do in regards to rental security deposits is only one small part of being a landlord. Make sure that this is something you consider carefully before making up your mind.
If you're looking for advice on this or any other topic we'd be happy to help. Get in touch with Indianapolis Property Management today.