Investing in a residential rental property can be profitable if they avoid the common pitfalls. In order to be a successful landlord, it is imperative that you learn the requirements for the state where the property is located and manage the duties and responsibilities accordingly.
One of the least understood aspects of being a land lord is the security deposit. And special attention is needed here since security deposit disputes are often the biggest headache for both landlords and tenants. Security deposits are designed to provide some protection to a landlord for damages and non-payment of rent. However, there have been so many abuses by landlords (and tenants) with respect to security deposits, laws in most states dictate the security deposit terms - maximum amount, interest rate, notice requirements, documentation of damages, time period of return, etc. In some states, failure to strictly comply with law can result in payment of double or triple the amount of the security deposit to the tenant. At a minimum, a landlord can reduce his/her risks by good tenant screening. The tenant screening offers you important information on your tenant background like evictions, credit history, criminal record, employment data, helping the landlord to reduce the monetary and other risks associated with a bad tenant. Of course, a great alternative to a security deposit is SmartDep – Security Deposit Replacement which also includes the Renter Report card tenant screen.