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Monday, September 20, 2010
Security Deposits Will Keep You Safe and, Well... SECURE
One of the best tools in your landlord/investor toolbox is the “security deposit”. In the State of Nevada, you can legally hold up to 3x the rent in security deposit. Unlike bigger states like Michigan and California, the eviction process in Nevada is relatively quick and easy so you do not really need to hold more than 1 – 2 months for qualified tenants. If you accept an applicant that you know you probably shouldn’t, then you can at least ask for 3x the rent in SECURITY deposit. Don’t be fooled by the old trick of accepting several months of rent in advance. This means absolutely nothing. A poor tenant will pay you rent in advance to show you they have the money but once that period of “pre-paid” rent expires, what protection do you have to ensure they continue to pay rent on time? What do you have to ensure they don’t destroy your home completely and walk away? If someone has poor credit or no credit and you feel compelled to accept them, don’t make the mistake of thinking a lump sum of rent is the same as a deposit. Rent can not be used like deposits legally so do yourself a solid and take lots of security. Security can be used for all sorts of things when the tenant moves out, like repairing the property, covering unpaid rent and late fees, etc. Obviously it goes without saying that I wouldn’t rent to my own family without a deposit so be smart and don’t ever let someone live in your home with no money in security held. You will almost certainly regret it. If they were your friend before, I hope they will be after they move out of your rental property.
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