Rental vacancies in Texas are at an all-time low, making this a perfect time for new landlords to step in and start renting out properties. Are you ready to start your role as a landlord?
You have a lot of things to learn! First, let's talk about security deposits. What are they, and who really benefits from them? Read on to learn the answers to those questions and more.
1. What Is a Security Deposit?
A security deposit is a sum of money that a landlord takes from a tenant when they're ready to sign a lease. The deposit is always refundable at the end of the tenancy as long as the tenant has abided by the lease and not caused substantial damage (more on that later).
There is no specific law in Texas regarding interest or how a landlord should store a security deposit as long as it's safe.
2. Who Benefits From Security Deposits?
Believe it or not, security deposits protect landlords and tenants alike.
On the tenant's side, the deposit secures the property and takes it off the market. Outside of extenuating circumstances, the tenant can expect to get the property they've put a deposit down on. Also, the deposit means that good tenants will receive that money back in the future and they won't have to pay for accidental damage out of pocket.
On the landlord's side, the deposit encourages good behavior from the tenants because they want their money back. It also covers any damage that may occur during the tenant's stay.
3. Is There a Security Deposit Limit?
In some places, there is a limit on how much a landlord can charge a tenant for a security deposit. In the state of Texas, however, no such limit exists. Landlords should, however, stay up to date with local laws to make sure they don't miss any changes.
Generally speaking, landlords tend to make their deposits equivalent to one month's rent. This is what most tenants expect.
Some landlords will set higher deposits if they accept "riskier" tenants. Others will waive deposits altogether if they're struggling with long-term vacancies. If you're not sure what to do, talk to your property manager.
4. Is Returning Security Deposits Necessary?
A landlord must return a security deposit at the end of the tenant's stay. Landlords can retain some or all of the deposit if it's to cover excessive damage or fees mentioned in the lease (but those fees must be legal).
The landlord has 30 days to return the deposit or give the tenant an itemized report that shows what the money is going toward. Tenants can take legal action against landlords who keep their deposits.
That's What You Need to Know About Security Deposits
So now that you're armed with information about security deposits, it's time to find your first tenants! Remember, as long as you return your deposits and keep them reasonable, you should have no problems.
If you're a Texas landlord looking for help managing your property, Blue Ribbon Property Management wants to meet you! Reach out to us today to learn more about our abundance of helpful property management services so we can start working together.