Did you know that Seattle renters outnumber homeowners? Now is an excellent time to be a property owner as so many people are looking for rentals. Are you ready to be a landlord?
There are a few things you need to understand before you start welcoming tenants. First: security deposits.
But what are security deposits? Why are they helpful, and how much should they cost? Read on to learn all about the answers to these questions and more.
What Are Security Deposits?
A security deposit is a refundable sum of money that a tenant will give a landlord when they're approved for a rental property. The security deposit "secures" the property for the tenant. Once the tenant pays, they have the right to the rental property as soon as their official lease begins.
But what is a security deposit for? Well, the security deposit benefits both the tenant and the property owner.
For the tenant, the security deposit (as we mentioned) secures the property. It brings the tenant's rental search to an end and they can start planning their move with confidence.
The security deposit also covers potential damage. If something were to happen to the rental property as the result of a tenant's actions, the cost to repair it would come out of the security deposit instead of out of the tenant's pocket. If the property stays in good condition, the tenant will receive their deposit back and they can use it on a future rental or put it toward a down payment.
For landlords, the security deposit protects the property. Knowing that there's a sum of money to pull from in the event of damage can give the landlord peace of mind. They also know that, because the tenant wants their deposit back, they'll make a greater effort to keep the property in reasonably good condition.
How Much Should You Charge for a Security Deposit?
So how much should a security deposit be?
If you're directly within Seattle, the deposit can be no more than one month's rent. If you're outside the city, there is no official limit, however, there is an advised one.
Landlords should try to limit their deposit to one month's rent, and no more than two, if they want to remain competitive. Often landlords will have higher deposits if they're allowing tenants who may not meet all of their qualifications.
Remember that potential tenants may not choose your rental property if the deposit is too high.
Do You Have to Refund a Security Deposit?
Security deposits are refundable unless the tenant has caused damage to the property. When the tenant leaves, they must get their deposit back. If you do not return it to them, and you don't have a good reason for keeping it, you will find yourself in legal trouble.
Tenants are also not responsible for normal wear and tear. That means that if there's chipped paint, worn carpets, or any other types of "damage" that could result from the normal use of a home, the tenant is not responsible.
Security Deposits Are Simple
Security deposits are a normal part of rental living and your future tenants understand that. Make sure you know all about the ins and outs of security deposits when you start moving new residents onto your property.
Do you need help managing your property in the greater Seattle area? We've got you covered. contact us to learn more about how we can help you today.