No one can accurately predict the future. There are many possibilities, and you cannot expect everyone to be prepared for all the things that will happen. However, there are things that we can anticipate and prevent.
In the world of residential rentals, landlords are always expected to be one step ahead. They must be prepared for anything that can happen on their property, and they should know what to do before it even occurs.
As a rental estate agent, you can guide the landlord on what to prepare for so that you can assure clients that their stay will be as seamless as possible. You may also have to act as a mediator between the landlord and the tenant at times. That is why you must be aware of these things too.
One of the things that will help landlords equip themselves for problems that may arise is by asking for security deposits, the amount paid for by tenants that will serve as insurance if there are instances of damage to the property.
Usually, the security deposit will be given at the time the lease agreement is signed. The amount will be returned after the lease ends, and will be based on the property’s post-tenancy condition if it will be returned in full, or not.
• Importance of security deposit
A security deposit is necessary for three main reasons. First, it serves as insurance and will help cover the cost of any damages due to the tenant’s negligence. Second, it will cover the unpaid rent of delinquent tenants. And third, it will encourage tenants to be responsible and to take good care of the property. Make sure the amount of security deposit is enough to cover these possible expenses.
• Amount of a security deposit
Remind the landlords not to charge too much for the security deposit because it might scare away potential tenants. They should likewise check their local state laws. There are areas with specific laws regarding security deposits and the limits as to the amount.
Some states will regulate that the security deposit will be worth two month’s rent and some a month’s rent. You must be aware of the state laws regarding rentals.
Factors that can affect the security deposit price:
• Market value
This is easy enough to explain. The higher the market value, the higher the amount of security deposit should be. It is easier to impose if the property has expensive appliances and furniture because repairing them will cost more.
• Furniture and Appliances
Some tenants prefer fully furnished units, so the landlords will have to purchase the necessary pieces of furniture and appliances. Landlords can charge for a higher sum of the security deposit if the property is fully furnished. It is only natural that the landlord asks for additional insurance for his investments. These items will also show signs of wear and tear eventually.
• Rental Price
As I have mentioned, some security deposits will depend on the monthly rental price and state laws. For example, in New York, a landlord is not allowed to charge for more than one month’s rent as a security deposit. However, in the state of Texas, there is no limit to the amount a landlord can charge.
• Additional Risks
The deposit covers the cost of damages resulted in the tenant’s fault. But what if the tenant has a pet? It will fall as an additional risk. The pieces of furniture in the property have a higher likelihood of experiencing pet-related damages.
If the tenant wants to move in with their pet, you should advise the landlord to increase the security deposit, pay a pet deposit, or have tenant insurance that covers pet-related damages.
When you advise the landlords about security deposits, make sure that you go over the different factors that will affect the amount. Helping a landlord avoid financial losses is an important role for rental estate agents.
Another way you can help them decrease their losses is by filling in their vacancy as quickly as possible. To increase the chances of you finding the best tenants for them, sign up and create a property listing for their property using Padleads.