You're ready to buy more rental properties. That's a great way to boost your business, but you must find ways to protect yourself. After all, rental properties require large investments.
Running tenant screenings is one way to protect your investment. Another is to collect security deposits.
When it comes to security deposits, are you handling things properly? Are you maximizing these deposits?
Here is a guide to help you learn the ins and outs of security deposits for your rental properties in Coppell, TX.
Collect the Right Amount
First, you must learn how much to charge for security deposits. Fortunately, Texas does not dictate maximum amounts for security deposits. This means it's up to you to decide.
The average security deposit is one month's rent. For example, you should charge $1,000 for the security deposit if the rent is $1,000 monthly.
Seek landlord advice from a rental property manager if you need it. They might suggest one month's rent or a higher amount.
For example, you could ask for twice the amount. In the above example, you'd ask for a $2,000 security deposit.
Of course, you'll also need to ensure you're charging the proper monthly rates. You can determine this answer by running a rental analysis on each property.
Store It Properly
Texas does not require holding security deposits in a special fund like other states. However, you should avoid spending the money. Keep the money readily available for times when you must refund it.
The best option for managing your landlord finances is to keep the money in a separate account. Open an account and use it only for security deposits.
Refund It When Tenants Move Out
Collecting security deposits is a routine part of a rental property business. However, this money is not rental income. It's money you must return.
Therefore, keep it available to ensure you have it when you need it. You may be allowed to withhold some of the money, but you'll need a valid reason for it.
Provide a Written Summary
You have 30 days to mail a written summary to a tenant after they move out. This summary must explain any money you withheld from their security deposit.
You must learn what you can charge a tenant for with this money. The primary things are past-due rent, cleaning fees, and damages to the apartment.
There are things you cannot charge them for from this money. The primary thing is normal wear and tear.
A property management firm can help you with this aspect of your business. They can also perform tenant screenings, maintenance tasks, and repairs.
Learn More About Security Deposits
Collecting security deposits is an essential step when renting properties. These deposits protect you and give you some recourse from damages tenants cause.
Hire a property management firm if you need help with security deposits or other aspects of your business.
PMI Cowboys Realty understands the challenges rental property owners face, and we're here to help. We are locally owned and operated and can help you minimize your expenses and maximize your income.
Reach out today to learn how we can help with your Coppell, TX, properties.
