Over a third of the New Jersey population consists of renters.
If you're a landlord, this presents a huge opportunity to create demand for your rental unit. With more tenants out there looking for housing, you'll have more opportunity to find the perfect person to rent your unit.
When there are lots of applicants, the tenant screening process becomes all the more important. Even with amazing tenant screening tactics, however, there's always a risk when you have someone living in your rental. You just never know if someone will cause property damage or unpaid rent until it happens.
Security deposits are the best way for landlords to guard against this. Keep reading because today, we'll give you a rundown on how these work in South Jersey.
Why Security Deposits Help
Security deposits are collected at the start of a tenancy. They act as an insurance policy in the event your tenant causes any property damage or has unpaid rent.
As the tenancy begins, you'll inspect the property with the tenant, making note of any existing damage. Throughout and at the end of the tenancy, you can check to ensure the tenant hasn't caused new damage. If they have, you can deduct the expenses from the security deposit.
Security Deposit Limits
Different states have different security deposit laws that limit how much you can charge your tenants. Some states don't impose a limit, but in New Jersey, you can only charge the equivalent of 1.5 month's rent.
So, if you charge $1,500 per month for rent, you can legally ask for a $2,250 security deposit. The typical security deposit amount for landlords, however, is just one month's rent. When you charge too much for a security deposit, you risk deterring good tenants from applying.
Withholding a Security Deposit
The process of withholding the security deposit can be tricky for landlords. It's very important to lay out all of the information around this subject in your lease agreement. You never want there to be any confusion should your tenant disagree with your decision to withhold the security deposit.
You'll need to provide ample evidence for why you've done what you've done. When you're talking about property damage, make sure to get proof of estimates and receipts for the repairs that occurred. If it's unpaid rent, you'll need to have proof of your communication with your tenant in case they try to take legal action.
How Property Management Can Help You
It can be tricky to navigate the world of security deposits. If you're unsure of how much to charge or when it's within your right to withhold some or all of the security deposit, it might be better to have a property manager deal with it for you.
At PMI Property Service, we're South New Jersey's top property manager. We can help you deal with everything from tenant screening and property marketing to security deposits and evictions. Contact us today to discuss your needs as a landlord and we'll tell you exactly how we can help your investment property thrive.
