You purchase real estate for your rental property business. This requires an investment, but it's not just a one-time cost. You also pay for repairs, maintenance, and renovations.
The good news is that you can rent these properties to tenants. They'll pay rent each month, but they'll also pay a security deposit when moving in.
Collecting security deposits is essential for your protection. However, you might need some tips about managing these deposits.
Continue reading to learn some essential security deposit regulations and practices in Hillsborough, NC.
Learn How Much to Charge
Tenant-landlord rules limit the amount you can charge for security deposits. These amounts are based on rental income and lease lengths.
For a typical one-year lease, you can charge up to twice the amount of the monthly rent. This means you can charge $2,000 for the security deposit if the rent is $1,000 monthly.
With shorter leases, you must charge less for the housing deposit. A full-service property manager can help you with this task and others.
Other Security Deposits You Can Collect
You may ask a property manager about other security deposits you can collect. The most common one is a pet security deposit. You can require this fee for pet owners, and it can be a non-refundable deposit.
How to Store the Money
Property management firms can also give landlords advice about storing the deposits. When you collect these deposits, you cannot simply spend the money. You also cannot store it in your regular business bank account.
Instead, you must place the money in a trust or buy a bond with it. You must also notify your tenants about where you put the money. Your tenants have a legal right to know this information.
Rules About Refunds
One of the most important things to learn is the rules about refunding security deposits. If a tenant fails to pay their rent, you can collect the rent money from the security deposit.
Of course, there are other methods for collecting rent when tenants refuse to pay. But you can also keep money from the security deposit if necessary.
You also have the right to hold back some of the money for damages the tenant caused.
As part of landlord-tenant law, you must give the tenant a written letter about the security deposit. You must tell them why you're keeping money from it, and you must send this letter within 30 days after they move out.
Seek Help for Your Rental Properties
Collecting security deposits adds a layer of protection when offering rental properties. You should always collect one, but you must also follow the laws in NC when doing so.
Do you need assistance with your rental properties in Hillsborough, NC?
Gates Management & Realty offers property management services in Orange County.
We strive to help property owners maximize their profits and feel confident with our services. We also focus on providing comfortable, well-equipped properties to every tenant.
Get in touch with us to learn more about our property management services.