Are you a real estate investor wondering how to calculate security deposits? It is important to determine what a fair deposit will be before you hand the tenant the keys. 9 out of 10 renters paid an average security deposit of $700 in 2021.
So how do you calculate security deposits before tenant placement? Charging too high could drive tenants away. A deposit that is too low could mean you pay for damages out of your pocket.
Do you want to learn more about how to calculate security deposits? Here is everything you need to know before your tenant moves in.
What is a Security Deposit?
A security deposit is a fee that the landlord requests before a tenant moves in or during lease renewals. This fee covers any potential unpaid bills or damage costs when the tenant moves out. Security deposits are refundable and calculated based on rental value and other factors.
A security deposit can provide a landlord with peace of mind.
How to Calculate a Security Deposit
The majority of landlords will charge an extra month's rent as a security deposit. Many states specify that security deposits cannot be more than one month's rent. However, security deposits can vary depending on the tenant and their background.
A security deposit may be higher if your tenant has support animals. Pets in a rental property can be problematic for a landlord. By taking a security deposit, you can cover any damages or cleaning costs that may occur.
You can identify high-risk renters by conducting a tenant criminal background check. A tenant background check can provide information about criminal history and employment. You can complete a tenant background check by using a property management company.
Consider a lower deposit for low-risk renters and senior citizens. Check that your local authority allows this. A management company can also help you with calculating security deposits for section 8 tenants and rental analysis.
State Laws for Security Deposits
Landlords have 30 days to refund a tenant's security deposit according to Texas laws. Tenants in Texas also have the option to pay a monthly fee instead of an upfront security deposit to cover potential damages. The landlord and tenant should agree on this between themselves.
A property management company can help you with Houston property laws and regulations. A management company will communicate with tenants on your behalf. They can provide lease enforcement services and rent collection.
You may prefer a leasing-only service. The duties are then split between the landlord and the property management company.
Get Help With Calculating Security Deposits
Calculating security deposits and rental fees can be stressful. This process is easier when you hire a property management company. They can also provide rental property inspections, owner statements, and property marketing.
Do you want to take the stress out of rental collection and property maintenance? A property management company can take care of rental property accounting and maintenance with no fuss. Contact Precision Realty and Management for expert assistance with tenant acquisition, lease negotiation, and more.