Top 7 reasons why Tenants lose Security Deposit money

Fewer Renters Can Afford to Own–Great news for Landlords!
July 18, 2015
Are Residential Rental rates going up?
August 17, 2015
Show all

Top 7 reasons why Tenants lose Security Deposit money

There’s an old Landlord saying….

If it wasn’t for the dealing with Tenants and property maintenance, Landlording would be Easy!

If you’ve been a Landlord for more than 2 months, you’re silently nodding your head acknowledging the above with a smirk.  It’s OK.  Everyone does it, too.

You also know that, as required by State law, you are required to send the outbound tenant a letter accounting for deductions to their security deposit.

With this in mind, here’s the Top 7 reasons why tenants frequently see deductions made from their security deposit funds:

1.  Light Bulbs.  

light bulbs

If your lease document does not require the tenant to replace burned out light bulbs in your property, you are literally throwing money out the window.  When our management company moves in a new Tenant, all the light bulbs are confirmed to be working and in good condition via photographs in our extensive Landlord PDF report.  So when the tenant moves out, the bulbs should all be working.  The average sized home has an average of 37 light bulbs.  Do you really want to pay for these?  Also, remember to check the exterior coach lights and porch/patio bulbs.  (These are the highest rate of burned out/missing, by the way.)

The Total Cost of replacing Light Bulbs includes:

  • The cost of driving to the store to buy them
  • The cost of the bulbs themselves
  • The cost of driving back to your property
  • The cost of labor “time” to install each bulb

2. Smoke alarm batteries.

smoke detector battery

Similar issue to light bulbs.  I recently did a Move Out Orientation meeting with a tenant in a 2,200 square foot, 4 bedroom two story home.  There were a total of 6 smoke detectors in the home.  Guess how many had 9V batteries missing?  Yup, all 6.  Same concept here as above….if your lease document doesn’t require the tenant to replace batteries, the tenant won’t do it, even though it’s for their own safety!

The Total Cost of replacing smoke alarm batteries includes:

  • The cost of driving to the store to buy them
  • The cost of the batteries themselves
  • The cost of driving back to your property
  • The cost of labor “time” to climb up and down a ladder to install each battery

3.  Paint and Drywall damage.paint issues

Ahhh, the proverbial and pervasive paint and drywall damage.  This is an area of concern on absolutely every Move Out meeting.  The tenant may claim,”That mark was there when we moved in!”.  Without clear photographs and detailed notes, you as the landlord or property manager have very little justification to deduct for this.  Such is why our company’s Move In and Move Out reports average 62 pages.  Yes, 62 pages.

One item to always keep in mind–State statute does not typically allow for you to deduct for ‘reasonable wear and tear’, so as a responsible landlord or property manager, it is necessary to keep this in mind.

The Total Cost of Paint and Drywall damage includes:

  • The time to drive to the property to do the Drywall repair
  • The time to do the Drywall repair itself
  • The time to drive home from the property (if you don’t have time to waste waiting around for the drywall mud to dry correctly)
  • The time to drive back to the property to finish the work
  • The time to sand and prep the drywall repair for painting
  • The time to paint the drywall repair
  • The time to drive home from the property

 

4.  House is Dirty.dirty floor

This next one should shock you as it is the easiest to do for tenants, yet still makes our Top 7 List.  Overall dirty property.  Tenants frequently underestimate how many manhours it takes to completely clean a property.  They are physically and emotionally drained from the moving process and getting set up in their new place.  Again, if your lease document does not specifically state the tenant shall return the property in a clean manner, reasonable wear and tear excepted, you are going to pay for someone to clean it.  Or you get to strap on rubber gloves and a vacuum cleaner and waste your evenings or weekend cleaning it.

The Total Cost of Cleaning includes:

  • The time to drive to the property to do the cleaning
  • The time to do the cleaning itself
  • Materials used to clean including paper towels and cleaners
  • The time to drive home from the property

5. Appliances.appliances

Almost a sub-item of #4 above….the dreaded appliances are returned by the tenants dirty.  This one is almost face-palm worthy since every tenant uses at least the fridge and microwave and dishwasher on a daily basis.  One point to mention–remember to pull out the fridge and check to see if the area under and behind was cleaned by the tenants, too.  You may need special cleaning here…

The Total Cost of Cleaning includes:

  • The time to drive to the property to do the cleaning
  • The time to do the cleaning itself–this could run into a few hours if the Oven is a self-cleaning kind that takes a few hours to heat up and cool down and puts out that nasty odor
  • Materials used to clean including paper towels and cleaners
  • The time to drive home from the property

6.  Carpets.carpet

Most flooring companies will tell you the best way to keep carpets looking good and lasting as long as possible is simple:  vacuum frequently, clean up spills immediately, and have them professionally cleaned once a year.  Again, a proper lease document will require your tenant to return the property with the carpets cleaned and, here’s the key, copy of a paid receipt from a professional company.  Who wants to move into a property where a past tenant clipped their toenails on the living room carpet?  Gross!  One more point here–make sure to check behind doors in closets and in hallway closets for spills and staining.

The Total Cost of Cleaning includes:

  • Cost of hiring a professional to clean the carpets.  This can cost anywhere from $120 to $300 if a larger rental or lots of staining/damage.

7.  Garage door damage/dinged.

garage door damage

Often times, when moving a tenant out, the overhead garage door will already be raised up since the tenant has been busy carrying their stuff out to a moving van or car.  The very first thing you should do prior to conducting the move out meeting is put the overhead door back down and inspect it for damage on BOTH SIDES.  This is to make sure you notice where someone may have accidentally hit the door with a car bumper or someone ran into the door with a bicycle or tractor.  These repairs are not cheap as they frequently require swapping out an entire panel of the door system along with adjustment of the opening motor.  You don’t want to be waving goodbye to the tenant and a week later discover an expensive repair.

Proper processing methods of your Move In and Move Out’s is critical for a Landlord to be fair with tenants and also to remain profitable as it relates to repair/Make Ready costs.

As always, call or click if we can be of assistance with your individual situation.


 

Fewer Renters Can Afford to Own Great news for Landlords!Dan Baldini is the Founder of Polaris Real Estate Polaris Property Management, LLC and has been an Adjunct Professor in the College of Business Finance Department at Butler University in Indianapolis where he taught Real Estate Investing.

Dan focuses his practice on the residential real estate markets including Indianapolis, Carmel, Zionsville, Fishers and other surrounding areas. Dan continually seeks out new resources for Team training and education in order to keep all the Team members skills on the leading edge of real estate best practices. He is an active real estate investor himself, owning and managing a portfolio of investment properties in the Indianapolis markets.

A resident of the Northside area since 1979, Dan has extensive intimate knowledge and experience of the market forces that dominate the Zionsville, Carmel, Fishers, and Indianapolis real estate markets. He has been active in real estate since 1996 with a specific focus on North side properties. Dan is an active networker in his local communities as well as with top agents nationwide

 

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *