About 46% of San Diego residents are renters. These renters are always seeking out new and better housing opportunities, and if you're a landlord, you need to get ready to provide that housing!
New landlords often get overwhelmed with all of the things they need to know to be successful. One of these things is security deposits.
We're here to talk all about how much you should charge for your security deposits. Read on to learn more.
Are There Legal Limits on Security Deposits in San Diego?
In San Diego (and all of California, for that matter), there are limitations on how much landlords can charge tenants for security deposits. These limits vary depending on whether or not the rental is furnished.
For an unfurnished rental, the landlord can only charge up to two times the cost of the rent. So if the monthly rent is $2,000, the security deposit can't be any higher than $4,000.
If the unit is furnished, landlords can charge up to three times the monthly rent to account for potential damage to the furniture. This means that the $2,000 unit could have a $6,000 security deposit.
There are no lower limits to security deposits, so it's up to each individual landlord to decide whether or not they want one at all (we recommend it) and how much they want it to cost as long as it's within the legal limits.
Recommended Security Deposit Amounts
So how much should you charge for a security deposit?
There are a few factors that go into this. The majority of landlords will charge no more than one month's rent for the security deposit. If you do the same, you'll be able to attract more tenants.
Often, paying double the rent for a security deposit is cost-prohibitive for renters.
If you're struggling to find tenants, it's acceptable to lower (or even waive) a security deposit in certain situations.
If a tenant has pets, you may want to increase the security deposit or add a pet deposit. In the state of California, the pet deposit in combination with the security deposit also can't exceed two months of rent for an unfurnished unit.
Remember that pet deposits in California are also refundable.
What Can You Deduct From a Security Deposit?
When your tenant decides to leave your property for good, they're entitled to get their security deposit back in 21 days. You can, however, use their deposit to fix any damage that they left behind.
This damage can not be normal wear and tear. You must make an itemized list of what you're using the deposit for and you must return any money that you're not using for repairs.
Tenants can fight this in court, so it's in your best interest to be honest.
It's Time to Start Finding Tenants
Now that you know the basics of security deposits, it's time to write your listings and find the best tenants in the city. Remember: while you can set your security deposit to up to two times the monthly rent, we recommend having it equal to the rent instead! You're more likely to find great tenants.
Speaking of finding great tenants, at Income Property Advsors Inc., we help San Diego landlords with tenant placement, lease enforcement, tenant screening, rent collection, and more!
Contact us to see what we can do for you!