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You need set a security deposit high enough to protect you from tenant damage or default. The security deposit serves as the protection you need before turning your rental unit over to a tenant.

A higher security deposit helps motivate the tenant to leave your property in good condition as they want some of their security back. It also can be used to cover the tenant’s unpaid rent or to reimburse you for costs associated with getting the unit back in rental condition and on the market.

If your security deposit is too high it will be hard to rent out your home.

State Laws Regulate Security Deposits

You have to becareful when dealing with security deposits. State laws limit the amount of security deposit you can collect and also how you return this money to your vacating tenant. The State has what they call “unlawful deductions”.

Here’s a good rule of thumb when setting the amount of the security deposit. If the monthly rent is $1,500 per month, charge a $1,500 security deposit if they don’t have pets. If you set the security deposit to the same amount that you charge for one or two months’ rent, you are fine. The limit varies in each State depending on whether the rental is furnished, whether the tenant is on a lease or a month-to-month rental agreement, whether the tenant has pets, what kind of beds the tenant has (i.e. waterbeds), and whether the tenant is a senior citizen.

In most rental markets, the prevailing security deposits charged in your neighborhood are well below the maximum amount allowed by law.

I recommend that you collect as much as you can for a security deposit without violating law. If your rental unit goes for $500 a month, collect a $1,000 security deposit if possible. The reason that you should try to collect as most as you can for a security deposit is because the security deposit not only protects you in the event of tenant damage and unpaid rent on move out, but it is an important psychological tool motivating the tenant to do his best to put your rental unit back in good condition when he moves out.

Never waive or lower the security deposit. If the prospect has good credit but (more…)

Technorati Tags: Lease, Property, Rental, rental agreement, rental markets, security deposit, security deposits, state laws, tenant

Filling out the Three Day Notice To Pay Rent Or Quit is easy. Probably one of the biggest fears people have about renting out their house is what should they do if the tenant doesn’t pay the rent.

The main things you need to watch out for is that your Three Day Notice To Pay Rent Or Quit has the proper wording for your local jurisdiction or state. Next, don’t do something stupid like demanding that the tenant pay you within three days in CASH only. If you do that, you will void your Three Day Notice.

Other things you have to watch out for is to make sure you don’t accidentally say “pay rent AND quit”. It must say “pay rent OR quit”. The idea is that you have to give the tenant the option to forfeit the lease.

Also you want to make sure that you don’t include anything but past due rent on your Three Day Notice. I know you want to include late charges, damages, etc. on your Three Day Notice but in the state of California you just can’t. You will render your Three Day void if you do this. You can include late charges when/if you file an Unlawful Detainer, not on the Three Day.

I uploaded a how to video for you on YouTube. In this video I show you just how easy it is to fill out this notice and kick a tenant out who is not paying you rent. This is so easy to do and is certainly not something that you should fear doing.

Duration : 0:6:41

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Technorati Tags: damages, Lease, proper wording, tenant, three day notice to pay rent or quit, unlawful detainer