When renting residential real estate, the collection of a security deposit can be just as important as collecting the monthly rent from your tenants. In fact, a security deposit can actually “protect” landlords in a variety of ways.
For instance, there are some tenants that will cause damage which is considered to be beyond normal “wear and tear.” In this case, such as with broken windows or big stains in the carpet, a security deposit could provide you with some or all of the funds that are necessary for getting the property back into rentable shape.
So, how much security deposit should you charge?
There are several criteria that you should ideally consider when setting the dollar amount of your security deposit. These include the amount of monthly rent that you charge, the amenities that your property offers, and what the law will allow.
First, one of the key factors that can influence the amount of the security deposit is the monthly rental price of the unit. Here, for instance, you may decide to charge the equivalent of one month’s rent.
This, however, may also be influenced by the various amenities that are (or aren’t) included with the property. For instance, the more items you have available to the tenant (such as a washer and dryer, an in-ground pool, etc.), the more things could possibly break (and in turn, require money to repair).
Also, there are some states that enforce a maximum amount that landlords may charge as a security deposit. While Florida is not one of those states, it can still be beneficial for you to check with your local city and county laws in order to determine if there is a cap on residential rental security deposits.
Operating a rental property (or multiple rental properties) can be fairly time consuming. If you would prefer to spend your time doing other things, then it may be wise to consider working with a property manager.
If you own residential rentals in Orlando and / or the surrounding Central Florida locale, give us a call for more details on how an experienced property management team could benefit you.