Security deposits can be challenging to manage, and it’s usually where most of the disputes between tenants and landlords originate. We get a lot of questions from people who aren’t sure how much they should charge for a security deposit. Our response is usually to ask how much they want.
California Maximum Deposits
The general rule in California is that you cannot take more than three times the amount of rent as a total move-in cost. That means if you are charging $1,000 per month for your property, you can collect no more than $3,000 total from a tenant to move in and get possession of the home. That would mean $1,000 for the first month’s rent and $2,000 for the security deposit. While twice the amount of rent is acceptable for the security deposit, most landlords take the equivalent of one month’s rent. This is a great rule of thumb for unfurnished properties. When you rent out a furnished property, you can charge a little more for a security deposit. You’ll want to complete a careful inventory of your belongings and come up with better number. But this is the general rule for most unfurnished, long term rental properties.
Tenants with Pets
When you have tenants moving in with pets, we recommend that you assess the situation and the pet, and then take a separate pet deposit or a pet fee that will cover any potential damages.
Returning the Security Deposit
At the end of a lease term, you have 21 days from the date that your tenant moved out to process the move-out and provide an itemized list of deductions. You’ll need to return the deposit or any balance that is left after your deductions within that timeframe. In some cases, there will be pushback from a tenant who doesn’t think you should be deducting anything from the security deposit. To avoid this, we always recommend you have a move-in and move-out checklist that you review with your tenant so there aren’t any questions about why you’re withholding money from the deposit.
If you have any questions about how to manage the security deposit collection and disbursement, please contact us at MSB Property Management, and we’d be happy to tell you more.