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Owning a great property in Denver is one thing. But turning it into a rental property is a whole challenge in itself!
You made a wise choice when you bought your property, as Denver is one of the most popular cities to move to in the country. But before you start looking for tenants, you must understand how security deposits work.
This is how you can ensure your tenants have a commitment to stay in your property. It can also help you pay for any potential damage that may occur.
Here's what to know about security deposits:
How Much Should I Charge for Security Deposits?
Currently, Colorado law doesn't set limits on how much to charge for a security deposit.
Generally, you'll want to charge the same amount as the monthly rental fee. You can charge more, but you can also deter potential tenants if the security deposit is too high.
You can also charge a separate deposit if the tenant has a pet. If the pet is a service animal, you're prohibited from charging a pet deposit.
Keeping and Refunding Security Deposits
Landlords must refund security deposits if the tenant doesn't leave the property prematurely. You must promptly refund the security deposit. Otherwise, you may face legal action.
Security deposit laws allow for 30 days to refund the deposit. You can extend this to a maximum of 60 days as long as it's written in the lease agreement. This is a crucial aspect of tenants' rights, so ensure you don't violate it.
However, there are reasons for keeping a partial or full amount of the security deposit. If your tenant leaves early, you can keep the deposit. If you've failed to meet your responsibilities as a landlord, your tenant can request a refund.
You can keep the security deposit to cover the cost of damages. You'll have to give a written reason explaining what the money will be used for.
Apart from damage to the property, there are a few other reasons to keep the security deposit. One is if the tenant has missed out on a rent payment.
Make sure your tenant pays rent on time. If you don't receive prompt payments, it's one of the main things that'll lead to landlord stress.
What Happens If I Sell My Rental Property?
If you sell your property during a tenant's stay, you can choose to return the security deposit. You can also give the security deposit to the new owner as long as you inform the tenant.
During this time, you can deduct expenses from the security deposit if appropriate. You should provide the written reason to both parties. Don't forget to offer landlord advice to the new owner!
Rent Your Property
Now you know the rules regarding security deposits with your rental property.
You should charge the same amount as your rental fee. You can also charge a pet deposit except for service animals.
Familiarize yourself with the rules of keeping and refunding security deposits. Always provide written explanations if you need to keep any part of the deposit.
Renting out your property can be a major stress. You need PMI Aspire to assist you with property management.
PMI Aspire has over 20 years of experience and consistent positive reviews and is waiting to hear from you!
