6 Important Reasons You Should Collect Tenant Security Deposits

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Are you afraid that asking potential tenants for a security deposit will turn them away from renting your property? If so, you’ve come to the right place to learn just how important collecting tenant security deposits really is.

jacksonville property manager collecting security deposit

As a landlord managing your own property, security deposits offer you a money safety net while renting out your property. Holding this extra money during a tenant’s lease can help put your mind at ease that a stranger is living in your investment property.

 

What is a Security Deposit?

A tenant security deposit is a money deposit paid upon signing the lease for the landlord to hold on to. The amount of a security deposit is typically equal to one month’s rent and is collected along with first and last month’s rent.

The landlord can use this security deposit to cover a number of expenses that may arise during or after the tenant’s lease agreement.

 

How to Collect, Keep, and Return Tenant Security Deposits

It’s important for landlords to check their state and local laws concerning how to handle tenant security deposits. In Jacksonville, Florida, there is no limit as to how much a landlord can ask for as a deposit. This means it could be equal to two or even three month’s rent.

Once collected, the landlord must inform the tenant in writing where the deposit is being held, if it is earning interest, and if so, how much.

When your tenant’s lease ends and they move out, Florida gives landlords 15 to 60 days to return the deposit. If the full amount is not returned, the landlord must also provide an itemized list of expenses with receipts.

While the laws can be confusing, there are plenty of references online about Florida security deposits.

 

The Importance of Tenant Security Deposits

When you collect security deposits from your tenants, it gives you a safety net for any unexpected expenses. There are a number of things you can use this money to cover to help you get the best return on you real estate investment.

 

1. Cover Excessive Cleaning Costs

If a tenant moves out of your rental property and leaves it way messier than when they moved in, you can use their security deposit to cover expenses to clean it. Whether you hire a professional cleaning company or buy supplies yourself, use the deposit!

Cleaning costs can arise if a tenant leaves unwanted furniture that must be removed in the property, excessively stained carpets, markings on the walls, or trash left behind. To avoid walking into this mess, remind your tenants to leave the property as they found it.

It’s always a good idea to take photos of the property before your tenants move in so you have proof of how it was handed over.

 

2. Repair Damages

Unfortunately, Jacksonville landlords can get stuck with some pretty difficult or careless tenants. If your tenant leaves the property damaged, you can use their security deposit to cover the repair costs.

Some examples of rental property damage include holes in the walls, scratches to the walls, broken appliances, indoor smoking, and more.

If you do have to use a tenant security deposit to repair damages, make sure to create an itemized list of the expenses and provide receipts.

 

3. Unpaid Utility Bills

Some landlords like to keep the utility bills in their name and charge the tenant the amount for each month. However, this puts them at risk of being left with the bill if the tenant decides not to pay one month.

If this is the case, then the landlord can use the tenant security deposits to cover the unpaid utility bills after they move out.

 

4. Cover Unpaid Rent

Some tenants let their lease end without paying the last month’s rent. Some may even make up an excuse for not paying one month and promising to make it up month after month. Even so – if your tenant moves out without paying a month’s rent, you can use their security deposit.

While you may not have gone through with an eviction process, you can still rely on the deposit to help you. Using the deposit prevents you from losing income for that month your tenant decided not to pay rent.

 

5. Lease Termination

There are a million reasons why a tenant may decide to terminate a lease. Whether they’re relocating for a new job or can’t afford to pay the rent anymore, you can charge them a termination fee.

This termination fee can be considered their security deposit if you wish. Once they have terminated the lease, you don’t have to give their deposit back and you’ll keep it as compensation.

If you choose to have this agreement, make sure to put a clause in the lease that states how much the termination fee is and that you can keep the security deposit (and more if you want) to cover the fee.

 

6. Ease of Mind

Being a landlord is not an easy job. You’ve worked hard to earn your rental property and now you’re working hard to make a profit from your investment. Don’t let bad tenants keep you from enjoying your investment choice.

Having collected tenant security deposits will help you feel at ease knowing that if unexpected expenses did come up, you don’t have to pay them out of pocket. You will receive your unpaid month’s rent or money to cover damages.

 

Have a Professional Collect Tenant Security Deposits for You

Rather than chasing down tenants for their security deposit – or any deposit at all – you can have a professional property management company do it for you. Cool Realty LLC serves landlords in Jacksonville, Florida from beginning to end.

From finding high quality tenants to collecting rent each month to managing property maintenance, Cool Realty LLC does it all.

If you’re looking for professional help managing your rental property contact us today!