Should I require a security deposit on my rental house?

Alex Smith here from gkhouses in Chattanooga with another edition of “Questions Owners Ask.” Today’s question is, “Should I require a security deposit on my rental house?”

You should always require a security deposit for your house.

Security deposits mitigate some of the risk that you take on in bringing a tenant into your house to live for at least 12 months.

About a year ago, one of our owners decided not to require a security deposit while her house was on the market. Now here we are a year later having to evict the tenant.

Once we got in the house and saw its condition, we found $3,000 worth of damage. The security deposit creates a safety net.

Unfortunately for this particular owner, there was a lot of work to be done to the house with was zero safety net in place.

However, even if you do require a security deposit, you are not necessarily eliminating the risk of work needing to be done when a tenant moves out. The deposit will at least create some semblance of a safety net.

We typically require a security deposit equal to one month’s rent.

That figure is industry standard. I have never had pushback from potential tenants on that security deposit amount.

We also require a double deposit from tenants with low credit scores, as long as they are not Section 8.

I would highly recommend a similar policy to any owner. If you have any questions, feel free to reach out! We would love to speak with you!