Being a landlord isn’t just about collecting rent. There are necessary deposits and fees to protect your investment and cover costs.
Let’s talk about a few and how to go about them correctly.
Security Deposits – How Much Do They Really Protect You?
A month’s security is great and all, but how much damage or repair does that really cover? Generally it is meant for things that are beyond normal “wear and tear” but who determines what “normal” is?
In the end a judge makes that decision if things go to court, but well before any of that you can use a lease to set the precedent with the tenant.
It really is a matter of just getting more specific. It’s expected that a tenant will hang pictures and TV’s that cause some holes in the drywall. However, it can be specified that any holes larger than “X” size are behind normal wear and tear and will be deducted from the deposit.
By putting something like this in the lease you are setting the bar from the jump and tenant’s will pay mind to it, because again, how much does one month’s security deposit really cover?
Call it defense with some offense, which also holds true for….
Tenant Proofing Your Property
I talk about this in my Investing in Rental Properties book and point out things that can be done to lower the probability of maintenance issues.
A quick example is replacing carpet with vinyl plank flooring. The latter is durable, difficult to stain can get wet and can even give the property a higher end look.
Pet Deposit and Pet Fee are two very different things.
Deposits are just that – deposits. They are meant for when something is damaged by the tenant. A fee is something that is paid, thus you keep.
Some people charge pet rent. It is something I may consider in the future, but for now I charge a one time pet fee that covers the cost to have the HVAC unit cleaned upon the tenant vacating as pet dander and hair always gets caught up in it.
There are many other things you can do to mitigate your risk in addition to these examples. This is the mindset you should have though when contemplating your deposit and fee situations.