One of the things your lease agreement needs to address is the amount of the security deposit that will be collected and held. Today, we’re talking about security deposit rates, and the importance of setting the right one.
Over the years, we have found that rates can vary depending on the market we’re in. Currently, we’re in a good market, so there should be no issues charging the highest amount of deposit that you can. There are a few things to think about.
Property Management Utah: Security Deposit Size
If you charge a security deposit that’s too small, you may not have enough money to cover potential damages at the end of a tenancy. If you charge a security deposit that’s too high, you may lose good tenants who cannot afford a large deposit before moving in.
Property Management Salt Lake City: Charging the Right Amount
At TierOne, we charge a 150-200% security deposit. That means up to 200 percent, depending on the property, should go towards damages. For example, on a property that rents for $1,000, we would charge a security deposit of between $1,500 and $2,000. Often, tenants will think that their security deposit can be used to pay the last month’s rent. No matter how much you tell them that’s not the case, they will still try to use that money for rent. So, when you charge a deposit that’s a little more than one month’s rent, you’ll have some extra funds to cover any potential damages. This system might require you to charge more, but in this market, it’s still pretty fair. If tenants cannot come up with that amount for a deposit right up front, they probably don’t have a good shot at making the rent payment on time every month. So, it shouldn’t be an issue.
Management Fee Guarantee
We promise the highest level of service possible, so we guarantee we don’t get paid until you get paid. If we lease your property, there will be no management fees collected until the tenant pays. The only exception is if an Owner is paying their vendors to “make ready” the property. We ensure you have peace of mind knowing that we are working hard for you. This is only one of the FIVE Guarantees we make to ensure you receive the TierOne service you deserve.
If you have any questions about security deposits, and how we handle them, please contact us at TierOne Property Management.
