Almost all landlords ask new tenants for a security deposit before they sign a tenancy agreement. While the amount may vary, these deposits typically equate to one month's rent.
When it comes to handling security deposits for your Houston, Texas area property, there are specific regulations that all landlords need to know.
Read on to learn more about what you should know whenever you take a security deposit from a new tenant.
Determine the Amount
Some landlords ask for the first month's rent as a security deposit, while others may ask for the first and last month's rent. If the tenant has pets, you may also need or want to collect a separate fee as part of the initial deposit.
Look carefully at the market to determine how much you should charge. In competitive markets, landlords might ask for more money, while in slower markets, they may ask for less.
There may also be specific laws around landlords and security deposits. Make sure you or your property management company are aware of those laws in advance.
Security Deposits and Property Conditions
The purpose of securing deposits is to help pay for potential damage once a tenant moves out. Always make sure you do a proper walkthrough with your tenant and provide them with a condition checklist.
Note all damages you and the tenant see before they move in so you can fix them now. Once the tenant moves out, you can use the same checklist to determine the condition of the property upon move-out. This list will help you determine how much of the security deposit you should return, and how much you'll keep.
In the meantime, your property manager should hold onto the deposit in a special account. This ensures you don't accidentally "spend" the deposit on something else.
Returning the Deposit
When your tenant moves out, you typically have a set amount of time to return the deposit. Make sure that these stipulations are clearly shown and easy to understand in the tenancy agreement so there's no confusion later.
Always return the deposit within the allotted timeframe to avoid issues. If you're taking money out of the deposit, it's important to let the tenant know why and exactly what the money you take is going toward.
Make sure you keep the line of communication open with your tenant. Address their questions and concerns as thoroughly as possible. And, if there are deductions, provide the tenant with photo or video evidence and receipts for repairs whenever you can.
Happy Landlords Equal Happy Tenants
Remember these tips when you're taking security deposits from new tenants. From following Texas law to performing walkthroughs, each step of the process is crucial to ensure that you're doing everything right.
At PMI Northwest Houston, we have over 20 years of experience helping landlords find and keep the best tenants in the Houston, Texas area. If you're ready to find out more or if you'd like to schedule a consultation, click here to contact us today.
