Between 2020 and 2023, there were over 17,000 evictions filed in Cleveland alone.
Landlords should always try to avoid evictions at all costs. However, when a tenant is putting your investment property at risk, you need to take the right actions to preserve it. There are ways you can mitigate the risk of poor tenant behavior, one of which is asking for security deposits on all of your rentals.
Here, we'll explain just how security deposits work and how you can use them to protect yourself and your property. You need to ensure you're adhering to your tenants' rights, but there are landlord rights too. Keep reading and learn how a security deposit now can help you down the road.
What Are Security Deposits?
At its core, a security deposit is a form of insurance against poor tenant behavior. It's there to give you financial security in the event you have a tenant who fails to pay rent or damages your rental property.
The way that it works is that you collect the damage deposit when a new tenant moves in. You'll usually collect it in conjunction with a move-in inspection, where you and the tenant make note of any existing damage in the property.
When the tenant moves out, you do the same inspection. If there's any new damage, the repairs come out of their security deposit. They can also be used to cover missed rent payments.
How Much Is a Security Deposit?
As far as landlord-tenant law goes in Ohio, it's a bit different here. Unlike most other states, there's no limit on how much a landlord can request for a security deposit. The state also allows for an additional pet deposit to cover pet-related damages.
As a landlord, it's important to understand the effect that asking for an exorbitant security/pet deposit can have on your pool of tenants. By asking for too much, you could drive away perfectly good rental candidates. Stick to the equivalent of 1-2 months of rent for your security deposit.
Returning/Withholding Security Deposits
The only other thing to remember with security deposit law is that you must return some or all of the deposit within 30 days of the end of the tenancy. If you're deducting any funds from the deposit, you must provide an itemized record of all the deductions.
Landlords need to have a thorough understanding of the difference between wear and tear and real damage. If a tenant disagrees with your deductions, they may decide to take you to small claims court.
How Property Management Can Help
Protecting your investment property can be tricky. It helps to thoroughly screen your tenants and understand when an eviction is necessary. Security deposits are a helpful way to add insurance to your rental unit and deter poor tenant behavior.
It can be uncomfortable for landlords to make security deposit deductions. If this describes you, it might be time to hire a property manager to help.
Remax Haven Realty is one of Cleveland's top realtor and property management teams. We can help you with every aspect of running your rental, including security deposits, so contact us today to find out more.
