If you're looking to invest in your future, real estate can be a great choice. With that said, it's important to know how to handle things.
Security deposits seem simple, but many landlords make mistakes with them. Understanding how they work and need to be handled is vital. It will help you avoid situations that could result in legal issues.
Let's go over some crucial tenant deposit tips that every landlord in Dallas, Fort Worth should know.
1. Rental Deposits Have No Limits in Texas
In many states, there are limits to what a landlord can request when it comes to security deposits. It's often up to the equivalent of one or two months' rent.
In Texas there are no limits, so you can ask for any deposit amount you like. With that said, it's sound rental security advice to not ask for too much.
If your deposit is too high, it will put potential renters off. Following limits similar to other states is generally a good idea.
2. There Are No Storage Restrictions
Something that also applies in many states is rules around how deposits are held. They typically need to be kept in dedicated accounts to keep them separate from any other funds. Sometimes, these must be interest-generating accounts.
This isn't the case in Texas, but it's still a good idea. Keeping deposits in separate accounts will ensure you don't get them mixed up with any other money. This will make things far more simple when it comes to issuing deposit refunds.
3. You Can't Charge for Wear and Tear
When tenants move out, you'll perform a moving-out inspection. This is to see if they've caused any damage to your property, and you can use their deposit to pay for anything that's needed. You'll then return what's left of the deposit to the tenant.
You can only charge for actual damage from things like destructive behavior and misuse, and this doesn't include general wear and tear. Anything that is expected to happen with normal use such as fading furniture or paint is considered wear and tear. Quality tenants are less likely to cause damage, so tenant screening is always a good idea.
4. You Must Return the Deposit on Time
After the tenant moves out, you'll perform an inspection before returning the deposit. Don't wait too long to do this, as you need to return the deposit within 30 days. It's also worth noting that the sooner you get this done, the sooner you can get new tenants in and continue making an income from the property.
5. You Must Provide a Statement of Damages
If you find damage in your inspection and use the deposit to cover the costs, make sure you note these costs down. You must provide the tenant with an itemized list of all deductions to show them exactly what they've been charged for.
Handling Security Deposits Correctly
It's vital that you know how to handle security deposits properly. This will prevent any legal issues and ensure you don't end up losing money.
Red Team Real Estate is a full-service real estate company serving Dallas/Fort Worth and the surrounding areas. We've helped hundreds of clients over the last 12 years, and you could be next. Contact us to find out more about our property management services.
