Security Deposit Tips for Landlords and Property Managers

Security Deposit Tips for Landlords and Property Managers

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Security Deposit Tips for Landlords and Property Managers

 

There are some things that property managers can do in order to avoid any complications when it comes to security deposit. Here are some simple tips that can help you avoid any complications when it comes to security deposit.

 

1. Know your state laws

 

As a property manager or landlord, you need to how much your state law allows you to collect, how quickly does it need to be deposited into a bank, are there required reports, if there will be interest – how should it be paid and so on. These are important things to understand when becoming a property manager. It is also important to understand that the security deposits for residential property falls under a statute and calls for a nondiscriminatory and equal treatment. This prohibits any kind of discriminatory practices.

 

2. Charge the right amount

 

Don’t be tempted to charge less for a security deposit, which you are entitled to. It might seem easier to have a lower amount in order to attract more tenants, but you might run into risks and problems down the road. You should always consider what your house is worth and consider who your tenants might be. Setting the right amount of security deposit will not only help pay for any damages that may occur to the property but it can also weed out the financially unstable tenants. That way you will get a tenant that you will want to let live in the rental property. The right amount can also help prevent a tenant from moving out unannounced.

 

3. Security deposit

 

Security deposits are not extra rent and you shouldn’t treat them as such. Those deposits have to be returned to the departing tenant assuming there is no damage to the unit.

 

4.  Establish trust accounts

 

Make sure you establish a trust or escrow account for the security deposit. Make sure your bank knows that the deposits account is for security deposits only. This is to help prevent any forfeiture of those funds being accidentally spent on your behalf.

 

5. Don’t Mix the Account

 

Make sure you keep security deposit trust account separate from your own, even though some state laws allow you to mix it with rents or turn it over to the rental owners. Try not to mix up the account because it is far too easy to accidentally spend the security funds.

 

6. Handling escrow money

 

Even though you have a broker’s license for many years and you can legally handle escrow money like security deposit, doesn’t mean that you should. Get trained or hire a professional who is an expert with escrow funding’s.

 

7. Let your property owners know

 

Make sure to keep the property manager in the loop with what you expect out of them. Take proper steps to ensure that your property manager understand the procedures and policies on handling security deposits. Along with that, make sure that the property manager understands what his or her are task and that they are to be completed. Don’t let his or her negligence cost you a tenant or lawsuit.