At Progressive Property Management, we expertly manage properties in the city of Tustin and the surrounding areas. Landlords often ask us about security deposits, and there are a couple of best practices that we’d like to share with you.
The security deposit law in California has a lot of details that landlords and property owners need to follow. There are limits to the amount you can collect, and there are deep penalties if you violate the timeframe that’s in place for returning the security deposit. Before you withhold any money from that deposit, you need to conclusively determine whether your property has been damaged by the tenant or is simply experiencing normal wear and tear.
Collecting Security Deposits
Odds are, if you are joining our blog or watching our video right now, you are probably only collecting a security deposit that’s equal to one month’s rent. This could be a mistake. Did you know that in the state of California, you can collect up to two months of rent for your security, or even three months if the property is furnished?
Most owners are comfortable collecting just the equivalent of one month’s rent because that’s what tenants expect to pay. If you try to collect more, you are likely to receive some pretty tough pushing back from your prospective tenants. Usually, they won’t want to pay the higher deposit because they don’t have the money or because they disagree with the principle of paying you more than one month for a security deposit. It may have been standard for many years, but the rental market is changing in California, and so is the legal landscape. Collecting more than one month’s rent is a really good idea for landlords who want to protect themselves.
Tenant Preferred Program
At Progressive Property Management, we realized that this was a bit of a struggle between landlords and tenants, and we did a little thinking and we came up with a creative solution. It’s called our Tenant Preferred Program. It makes both our owners and our tenants happy, so we think it makes sense for a large part of the rental market in our area.
Under this program, you will still be able to collect your security deposit that’s equivalent to two months of rent, but we make some concessions for the tenant. The tenant will only have to pay the equivalent of one month’s rent or even no security deposit at all if they’re willing to pay a waiver fee.
With the waiver fee, you are still collecting the money you want to keep in reserve, and your tenants are relieved of the financial burden of having to come up with the entire amount before moving in.
There’s a lot more to tell you about this program, and we are always interested in educating landlords and investors about California’s unique security deposit laws and how they affect your property. If you would like to learn more, please contact us at Progressive Property Management.