5 Reasons You Should Collect a Security Deposit When Renting Your Home

security deposit

As a property manager, you take great care to ensure that your units are in excellent condition.

Unfortunately, not all of your tenants will do the same.

This is why it’s essential that you collect a security deposit.

But what else can rental deposit help you with — and prevent you from having to pay for?

Read on in order to find out.

1. If a Tenant Damages the Unit

The most important reason why you should collect an apartment security deposit?

Because unruly, careless, or destructive tenants may damage the unit so that serious repairs are needed.

These damages may be accidental, or they may be intentional — like when a tenant pants a room or installs carpeting even though it wasn’t allowed by the lease.

They need to be held financially responsible for their actions. You’ll need to ensure though, that this is less than “normal wear and tear” and more serious damage.

2. If the Unit Must Be Seriously Cleaned

Even if no damages were done to the structure or the appliances within the apartment?

Collecting a security deposit ensures that, should the apartment be excessively dirty, you’ll be able to pay for the cleaning services required.

This is common if the tenant had a pet or a young child, or if the unit was furnished and furniture must be specially cleaned.

3. If a Tenant Does Not Pay Rent

Unfortunately, some tenants will just decide that they no longer want to pay rent. They may also not have the money to make rent.

As a landlord, you know that the eviction process is seldom as straightforward as it seems.

It can be tough to get these people out of your property, even if they don’t pay rent.

This is where collecting a rental deposit can be your saving financial grace.

4. If a Tenant Breaks a Lease Early

If a tenant decides to move out earlier than they’d originally intended, then you can use the money collected in the security deposit to keep you financially afloat while you find a new tenant.

The tenant may let you know they are moving out early, or they may just move out without letting you know and stop paying rent.

In this case, you may need to take legal action. The money from the security deposit can help with those fees, as well.

5. If Utilities Aren’t Paid Up

Sometimes, a tenant will attempt to leave the premises without paying their utility and electric bills.

In this case, you can use the money from the security deposit to ensure that you don’t get stuck paying them.

Collecting a Security Deposit Is the Right Move

As you can see from this post, there are countless reasons why you need to collect a security deposit from tenants.

Of course, that’s far from the only thing you need to know about becoming a property manager.

Be sure to keep checking back with our site for more ways on how to treat your tenants and to protect yourself legally and financially at the same time.

Property Management Fees: How Much Should You Expect to Pay?

property management fees

Are you looking for ways to make your investment property run as smoothly as possible?

Whether you own a whole apartment building or a single condo, it’s important to understand the work that goes into managing a rental property.

Hiring a property manager can help you mitigate some of that work.

Read on to learn all about the property management fees you should expect to pay to make the best choice for you!

Typical Property Management Fees

Property Management fees can vary based on the market and the value of the property.

Some rental property management companies charge a flat fee per month. Others will charge based on a percentage of the monthly rental payment.

As a starting point, expect fees to be somewhere between 8% to 12% of the monthly rental value.

Setup Fees

When you first engage a property manager, the first fee you come across might be a setup or onboarding fee.

This is a one-time fee that will cover the cost of setting up your account. It also might cover a property inspection to assess the condition.

Monthly Management Fee

The management fee is what you’ll pay to the property manager each month that you work with them.

It will cover day-to-day property management. This includes collecting rent, tenant relations, annual inspections, and taking emergency calls.

As mentioned above, many companies will charge based on a percentage of the gross rent collected.

When negotiating these fees, be sure to pay close attention to the contract language. Speak with a lawyer if you have any questions.

Leasing Fees

Most rental property managers have a fee for leasing and releasing the property if your home becomes vacant.

Leasing fees cover advertising costs, inspections, and the cost of screening prospective tenants.

You can expect this fee to be some percentage of one month’s rent.

Additionally, some management companies will charge a lease renewal fee for existing tenants that choose to stay. This fee is usually $200 or less and covers the cost of making any lease adjustments.

Other Fees to Consider

As you research the various property management fees, it’s important to consider other fees that might affect the viability of your investment.

For example, you’ll want to keep your maintenance budget in mind and plan to set aside rental income for that purpose.

Discuss with prospective property management companies how you would like to be notified about routine maintenance. A general rule of thumb is that you should budget 1 percent of the property value per year for maintenance fees.

Is Property Management Right For You?

Knowing about these property management fees and preparing for them will help you determine whether property management is right for your investment.

Proper budgeting is key to successful real estate investing, so be sure to keep these ideas in mind as you move forward with your investing journey!

Looking for property management solutions or a real estate agent to help? Contact us today and the eFind Agent team will be happy to answer your questions!