The population in Salt Lake City continues to grow each year, increasing the demand for rental properties. As a landlord, you can reap the benefits of providing quality rental units to those who need them.
Buying investment properties can be lucrative, but you should always require security deposits. Newer landlords sometimes wonder if they need to collect these, and many skip them.
You have the legal right to collect a security deposit, and you should.
Continue reading this guide to learn why all property managers and rental property owners should require security deposits and some regulations relating to them.
Understanding Security Deposit Regulations
In Utah, landlords aren't bound to security deposit caps. Therefore, they can charge the amount they choose.
Choosing a fair amount is vital, though, as you need enough for protection but a low enough amount that tenants can afford. As a result, many landlords charge a security deposit equivalent to one to two months of rent.
For example, charge $1,200 to $2,400 for an apartment with $1,200 rent. You should create a security deposit fee schedule for all your tenants. You can base it on your monthly rental fees or a person's credit score.
You can also charge more for extra things, such as pets, but you should always collect the deposit before the tenant moves into the unit. You should collect all the tenant fees before handing over the keys.
Collecting and Holding Security Deposits
Once you create your security deposit collection system, decide how to manage it. You must find a secure place to store the money you can readily access when needed.
Additionally, keep good records so you know how much each tenant paid for their deposits.
Inspecting the Property and Deducting Damages
You should also perform move-in and move-out inspections to determine a unit's condition when the tenant acquired it and moved out. Keep these records to review them when the tenant moves out.
A move-in inspection documents the apartment's condition when the tenant rented it. You have the legal right to charge the tenant for damages above and beyond normal wear and tear, but you need the move-in report.
You can use this document when holding a tenant security deposit after the tenant vacates the unit. Failing to follow these tips can lead to costly mistakes.
Returning the Security Deposit
Finally, follow all the laws in Salt Lake City, UT for returning the deposit. One law is that you must return the deposit within 30 days of the person moving out.
If you withhold money, you must provide a written itemized list of why you are keeping some of the deposit. The tenant has the legal right to appeal your decision.
Seek Help With Your Rental Property Business
You can legally charge security deposits to all the tenants who move into your properties. Create a schedule and protocol for this process and follow it with every tenant.
If you're new to rental property management, hire a company to help.
Wolfnest is an experienced property management company that began serving the community in 2012. Our specialized staff can help with any investment situation.
Get in touch with us today to find out how we can help.
