Security deposits are upfront payments that 91% of renters make before moving into new apartments.
This money serves as an assurance that the tenant will take care of the property during their time there. If they don't, landlords can use it for repairs and maintenance, which makes these funds critical to your job as a property owner.
Here, we're going to talk about managing security deposits as a landlord. Read on to learn some important things you need to do before proceeding with deposit collection.
DO: Know State Security Deposit Laws
The first thing for landlords to do is understand the security deposit laws in their state. This ensures that you don't find yourself in legal hot water with tenants who want their deposit back despite causing damage.
In Ohio, there is no maximum security deposit amount. You can charge your tenants whatever fee you see fit. However, to remain competitive in the real estate market, it's recommended that this not exceed the first month's rent (or two months in some cases).
You must return this deposit within 30 days of the lease ending if the renter:
- Pays all of the rent that was due during their leasing period
- Did not cause damage beyond normal wear and tear (slightly scuffed carpets, faded blinds, a reasonable amount of paint peeling, etc)
- The tenant gave you a mailing address that you could send the deposit back to
If you do choose to withhold any of the security deposit at the end of the lease term, you must give the tenant an itemized deduction list.
DON'T: Do Everything on Your Own
Security deposit collection can be a challenge. Tenants don't like to pay a move-in fee and you're likely going to need to ask them for it a couple of times. This can be stressful and time-consuming.
It's also challenging to keep track of security deposits when you own multiple properties. This is especially true if each property holds multiple rental units. That's a great way to get income, but it can be hard to organize.
Akron property managers can help you keep everything in one place and manage deposits. Our team has tools to track who has made deposits and who is due to get them back.
DO: Hold and Store Security Deposits Correctly
In Ohio, you're not legally required to store security deposits in any specific way. However, it's a good idea to put it into a separate account from rental payments or maintenance funds. This ensures that you won't use the deposit since it's still technically not yours to spend.
Escrow accounts work wonders here, and property managers can help you store funds in them. This is a great way to remain organized and remain compliant with landlord-tenant laws.
Get Started With Akron, Ohio Property Management
Now that you know how to manage security deposits the right way, it's time to improve your efficiency as a landlord.
Property management services in Akron, Ohio are committed to helping you abide by all landlord-tenant laws, collect deposits and future rent easily, and find reliable tenants who care for your property. Schedule a consultation with PMI to learn how much you could profit from your rental with appropriate management.
