The average monthly rent for a two-bedroom apartment in Georgia was $772 in 2023. However, you might charge more or less, plus a security deposit, when renting a unit to someone.
As a landlord, learning how to handle security deposits properly is vital. These deposits protect you and your investment but are also a liability, as you sometimes must return them.
Do you need some advice on how to handle your security deposits? Keep reading to learn three helpful tips.
1. Set Clear Guidelines
Collecting a security deposit from each tenant is your right and duty. This money protects you from damages a tenant causes in a rental property. But you should always set clear guidelines.
For example, set clear guidelines for the monthly rental charges for your units. If you need help with this, contact us for a free rental analysis.
Next, set clear guidelines for security deposit amounts. A standard formula landlords use is to charge a security deposit equal to the monthly rent.
For example, charge $700 for a security deposit for an apartment with $700 monthly rent.
Another guideline is the timing of receiving the deposit. For example, your rule could be that you must receive the deposit before the tenant moves into the unit.
You can also set other guidelines, including extra security deposit fees for pets. Talk to a property management service company to learn more.
2. Learn the Allowed Deductions
Next, you should learn about the allowed deductions. The security deposit helps you with damages your tenants cause, but it's not for normal wear and tear.
What can you deduct from the security deposit? Here are some of the things:
- Unpaid rent
- Unpaid utility bills
- Damages to the unit
A property management company can help you learn how to determine what you can deduct. You can't deduct normal wear and tear, which naturally occurs in all rental units when tenants live there.
3. Understand the Return Rules
The third tip to help you manage your security deposits is to learn the return rules. When you require security deposits, you must follow the law when tenants vacate the units.
To do this, consider keeping the funds in a separate account so they're easy to access.
When a tenant moves out, fill out a move-out form within a few days. This form helps you analyze the apartment's condition. You can use it to address the security deposit return.
In Georgia, you must return the money within 30 days of the tenant's move-out day. If you hire property managers for assistance, they'll handle this for you. Letting someone else handle it helps you avoid legal issues.
Handle Security Deposits Properly
Running a rental property business is a tough job. However, you'll have fewer challenges if you handle things properly, including security deposits.
Following the law should be the top objective, but learning other tips also helps. Do you have questions about this or need assistance?
Contact us at Property Management Inc. in Atlanta. We offer property management services and can help you run your business.
