Deposits on your Kansas City Rental - How to Price to Cover Yourself

Moving is hard enough on most people’s wallets. There are expenses involved every step of the way from securing utilities and a moving truck to actually having to pay the first and last month’s rent plus a security deposit. As a Kansas City property manager or landlord, you no doubt need to cover yourself with these charges, but it’s important to be understanding, too.

Typically, most Kansas City apartment and home rentals charge anywhere from a few hundred dollars to as much as twice the rent for a security deposit. Add to these charges extra fees for pets and the bottom line for a renter look for a place in Kansas City can rack up fast. So, how do you decide what’s right and what’s too much in regard to deposits?

There are many factors to take into account when setting deposit amounts. These include state and local laws, the costs you might incur if the rental is returned damaged and more.

When it comes to security deposits, there are good reasons beyond common sense financing to charge them, too. So, don’t worry about asking for them if the prices are reasonable. In most cases these fees are charged with the promise of return if the renter renders the rental property back in good condition. The amount to charge generally is enough to cover a deep cleaning service and maybe pay for minor damage such as wall repairs. The amount you charge should be based on what these things will cost you. Remember though, normal wear and tear is just that. It’s your responsibility and not the tenants to pay for what’s considered normal. The residents are responsible, however, if the damage is over and above a few nail holes in the wall and typical carpet dirt.

One of the biggest benefits of charging a security deposit, over and above the obvious, is the fact the fee gives a resident a sense of “ownership” in the property. In most cases, a security deposit is charged with the anticipation of an eventual return. If a property owner or manager requests, let’s say $1,800 for a security deposit, and promises to keep the money in an interest-bearing account, the smart Kansas City renter looks at that as a savings account. That $1,800 over the course of a multi-year lease with interest attached is a whole lot of money to walk away from so the resident more than likely will do what he or she can to protect that investment in your property.

As a Kansas City property owner or manager, you are responsible for keeping up your end of the bargain, too. If you say the money will be returned if the property is surrendered with no more than normal wear, you need to do so. If you’ve promised interest accruement, you need to do this, too. The best way to handle this on your part is to set up an interest earning escrow account on the renter’s behalf. All monies will either A.) be surrendered to the renter when the lease is complete, or B.) be kept in full or partially to cover repairs and/or damage if this is the case.

When you sit down to figure fair deposit amounts, it’s vital to know local laws as well. Most states set a limit on what a property manager or landlord can charge. If you go above that limit, you could get into a legal bind. The tricky part here is that the legal limit can vary from state to state. Add to that the fact local authorities can under the law set stricter limits, and it pays to know local codes before you move forward with setting a security deposit amount. A general rule of thumb is to follow the law or go below it if it’s feasible.

When it comes to pet deposit fees, these generally are set to cover the expenses of cleaning and deodorizing carpeting after a renter moves out of your Kansas City apartment or home rental. The fees are generally charged for all kinds of animals, but may sometimes be higher in the case of dogs versus cats. Once again, it’s important to be fair and not go overboard on the charges and also to know local laws governing such fees.

Whatever you end up charging for a security deposit, make sure the price is fair and you follow through on promises to residents. If they do their part, they will expect and will deserve the money in return. The “investment” will encourage good renters to treat your property like their own, so be prepared to reward them with your honesty if they carry through with their end of the deal. If they don’t, you are within your rights to keep their deposit to cover your expenses.