Security deposits are one of the most important tools a landlord has to protect his or her rental property. However, CHBO found that only 84% of “by owner” landlords regularly collect a security deposit, according to a 2010 by owner survey conducted by CHBO (down from 92% in 2009).
Let’s discuss some of your common security deposit questions:
Wondering what other “by owner” landlords are charging?
Thirty four percent say they charge one month’s rent as a meaningful security deposit, while 24% charge between $500-$1000 and 22% charge between $100-500. Corporate housing companies charge, on average, $682 according to a survey by the Corporate Housing Provider’s Association.
Should you require an additional security deposit for pets?
Yes, many owners charge an additional pet deposit or fee to insure themselves against damage and wear and tear caused by a pet. On average, “by owner” landlords charge a one-time, non-refundable $175 pet deposit fee.
What are the rules to returning security deposits?
Security deposits must be given back to the tenant (if no damage is done to the property) in a timely fashion. State laws govern this time period (generally within 21 days), but you’ll need to confirm return limits in your state (we created a cheat sheet here for your reference). We recommend returning it as soon as the tenant leaves and you’ve had a chance to inspect the property. The more time that passes, the more questions may arise as to whether the damage was done by that tenant or a following tenant.
Why do some corporations deny security deposits?
Corporations often balk at the idea of locking up money in a security deposit – and it can kill a deal. Because landlords feel pressure, they may skip the security deposit in order to “seal the deal.” Beware if you do this because someone who isn’t willing to pay a security deposit may have something to hide. Do your homework and research the tenant/corporation before making any decisions about whether or not to skip the deposit. If it’s a reputable corporation, you can probably feel good that the property will be gently used by its employee and that the company will cover any damage to the unit. After doing a little research on the company or individual and things turn up okay, you can also have them sign a LOR, or letter of responsibility, which you can download from your MyCHBO account.
Remember, security deposits are meant to protect your property and yourself from unruly tenants. Plus, they make an effective incentive for a tenant to keep the place orderly. Don’t overlook their importance!