Finding tenants in 2023 is fairly easy for landlords. After all, rental property vacancy rates fell to 5% in 2022.
However, finding great tenants is always a challenge. One way to protect yourself is by charging security deposits.
You can require a security deposit when a new tenant moves in, but you must follow Arizona state laws.
Continue reading to learn a few vital things about security deposits in Arizona.
Learn the Security Deposits Limits
As an Arizona landlord, you can collect up to 1 1/2 times the monthly rent as the security deposit. That's the maximum you can collect, but you can collect less.
For an apartment with a $1,000 monthly rent, you can charge up to $1,500 as the security deposit.
Collecting Arizona security deposits is essential for a landlord. The security deposit protects you and your property. You can keep the money in certain situations when the tenant moves out.
It also gives the tenant an incentive to care for the unit. Tenants understand that security deposits are refundable. This means they can get the money back if they follow the lease and avoid damage to the rental unit.
Understand How to Hold Money Back
Choosing high-quality tenants is vital. These tenants pay their rent and generally take good care of their rental units. You can run background checks to find great tenants.
Some tenants might not follow their leases, though. They might not pay their rent, and they might damage their apartments.
In these situations, you may hold back some of their security deposits to cover the costs.
First, you must learn the legal reasons to withhold returning the security deposit. The two main reasons are for the rent a tenant owes and the damages they caused in the rental property.
Secondly, you must follow the legal timeline in Arizona. In this state, you must return the security deposit within 14 business days. This period begins when the tenant vacates the unit.
Finally, you must send an itemized list of deductions if you withheld money from the security deposit.
Keep the Money Separate
When collecting money for security deposits, keep it separate. For example, set up a savings account to hold all the security deposit money.
Doing this gives you access to the funds when you need them without affecting your cash flow. This is a helpful accounting tip to follow, but you can learn about more accounting tips for your business.
You may hire a property manager or rental management company to help with these tasks.
A property management company will know all the laws in Arizona and will follow them. They'll also do the work for you, freeing up your time.
Seek Help for Your Rental Properties
Running a rental property business requires work, knowledge, and time. You have to find great tenants and collect security deposits, but that's only one aspect. There's so much more.
You can hire a property management firm if you need help.
PMI Real Estate Services operates in the Phoenix Area. We provide residential and commercial property management services. Our team of experts can help with any tasks you need.
Reach out today to learn more!