Did you know that the median sales price for Boise real estate is close to $550,000? With home values increasing faster than most workers salary's, renting continues to be the only option for most Idahoans.
With rental demand higher than ever, owning a rental property continues to be a great long-term investment. An essential part of being a smart property owner is mitigating risk. Security deposits are an essential tool for Idaho landlords looking to protect their future.
All landlords should consider requiring a security deposit. Keep reading to learn more about why they are essential for all of your rental properties.
What are Security Deposits?
A security deposit is a lump sum of money required before a tenant's move-in date. Traditionally it's at least one month's rent.
Renters put down a deposit. This deposit is returned at the end of a lease period if the tenant abides by the terms of the lease agreement.
For Boise landlords, state law outlines that a security deposit cannot cover normal wear and tear to a property. Rather, it's a safeguard for landlords. A deposit can be used to cover things like property damage, broken lease agreements, and unpaid bills.
Protect Yourself Against Property Damage
Security deposits can cover the cost of damages caused by a tenant, their family, or guests. This includes severe damage to items like major appliances, owner-provided furnishings, or even outdoor areas.
While a deposit covers repairs, it doesn't cover cosmetic upgrades or regular maintenance.
If you decide to use a security deposit, you'll be legally required to provide your renter with a list (including the cost) of repairs. To avoid future challenges, it's a good idea to clearly outline expectations in your lease agreement and do a thorough property inspection before a tenant moves in.
Mitigate Against Financial Risk
Security deposits also protect you against other expenses associated with leasing a property. Depending on your lease agreement and local state law, it can be used to recoup lost rent, non-payment of rent, excessive cleaning costs, or unpaid utility bills.
If a tenant breaks their lease without proper notification or fails to pay rent, in most situations, a deposit can also be used to cover legal fees as well.
Find Support for Managing Your Rental Property
From Idaho Falls to Boise, Idaho, landlords should consider collecting a security deposit. Security deposits are an important component of any good lease agreement. Whether a tenant excessively damages your home, disappears, or breaks a lease agreement, it's good to know that some or all of your losses will be covered.
If you have additional questions about managing a rental property, the experts at HomeRiver Group® Boise are an excellent resource. With over 15 years of local experience, we can help get you the answers you need.
Explore our blog to learn more about industry best practices for your Idaho rental property.