Managing rental property comes with risk. As landlords and property managers, it is our job to minimize that risk. One easy way to do this is to require that tenants provide a security deposit. Seasoned landlords know the importance of a security deposit, and have possibly even been burned in the past by failing to require one.
Erin Eberlin wrote an article on The Balance, entitled “What is a Security Deposit?” For new landlords, it provides a lot of basic information regarding security deposits, along with some helpful links. In the article, the author sites three of the major benefits to collecting a security deposit, which really sums up its importance:
- Tenants More Careful- No one likes losing money. If a tenant knows their actions will determine if they receive their full security deposit back, they are more likely to avoid damaging their apartment and will want to follow the terms of their lease.
- Safeguard Against Damage- By collecting a security deposit, a landlord can take immediate deductions from this deposit instead of having to file a lawsuit against the tenant to pay for the damages.
- Safeguard Against Non- Payment- Since a security deposit is usually equal to one month's rent or more, it helps to financially protect the landlord if the tenant stops paying their rent.
Requiring a security deposit on the front end is a simple part of the leasing process that can save a landlord hundreds, if not thousands, of dollars on the back end.
To view the full article on The Balance, click here.