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!