Nearly 13,000 Denver renters faced eviction last year.
As a landlord, you never aim to kick one of your renters out of your unit. Sadly, you're often left with no other choice when your property is put under threat. One of the ways that you can prevent and proactively deal with poor tenant behavior is by charging a security deposit.
Today, we'll give you a short guide on security deposits. Keep reading and you'll be able to protect your rental property simply and passively.
What Are Security Deposits?
Security deposits are essentially a form of insurance for landlords, along with eviction protection and tenant screening. They protect you from having to pay out of pocket when a tenant damages your property, not to mention that they deter tenants from damaging your property in the first place.
Typically, you'd collect a security deposit from a tenant at the same time you perform a move-in inspection. During the inspection, you walk around with the tenant to make note of any existing damage. These inspections help protect the tenant from paying for someone else's wrongdoing.
A the end of the tenancy, you perform the same inspection. Any new damage is presumed to have been caused by the outgoing tenant and the repairs are taken out of their security deposit. You can also withhold for other things, such as failure to pay rent.
Laws Around Security Deposits in Colorado
Security deposit laws are centered around how much a landlord can ask for a deposit, how they hold the money, and what they can charge a tenant for. In Colorado, there's no limit on how much a security deposit can be.
It might be tempting to ask for a sizeable deposit to cover all possible damages. Remember, however, that the more that you charge for a security deposit, the more tenants you'll deter from applying. It's best to keep it at the equivalent of 1-2 months' rent.
Returning and Withholding
When it comes to returning the security deposit, you must do so within a month of the tenancy ending. If you choose to withhold some of the security deposit, you must have good reason to do so. This is where it's very important to know the difference between damage and wear and tear.
Regular wear and tear is common in all rental properties. Examples of damage include large holes in the walls, pet damage, and stains in the carpet. If you're withholding for these things, it's best to keep track of costs and document the damage in the event the tenant disagrees with your assessment.
How Property Management Can Help
Security deposits are a helpful tool for landlords, but the process of withholding can still be stressful and awkward. If you're having trouble with your tenant or their security deposit, hiring property management could be the answer.
PMI Cedarbolt is the top choice for a property manager in Denver. We offer comprehensive services that include tenant screening and management.
Contact us today to learn how we can help you collect security deposits and maintain your rental income.
