“There is no security on this earth; there is only opportunity.” Douglas MacArthur

There comes a time when we must return the security deposit to a former tenant. We have 21 calendar days to send an accounting of deductible expenses and, if there are remaining funds, a check made out to the former tenant.

WHERE DO I SEND IT? The general rule is to send it to the last known address of the former tenant. If the tenant has given you a forwarding address, that is where you send it. If you do not know the tenant’s new address, you would send it to the unit they were renting for you. If the mail was forwarded, it would go to their new address. If there has been no forwarding, retain the postmarked letter as proof that you sent the letter, as the law requires.

WHAT SHOULD THE LETTER SAY? The Apartment Owners Association has a great form you can use, or you can create your own. The letter should show the date the tenant moved, the original security deposit amount, and a list of allowable deductions. If the deductions are more than $125. you need to send an invoice for the listed expenses. You will also show the remaining amount and you should enclose a check if there is a balance.

WHAT IS ALLOWABLE There are a number of deductions which can be subtracted from the deposit amount. These include cleaning, so the unit is as clean as when the tenant first moved in. It is a good idea to keep photos of the unit taken during move-in and move-out. Another would be damages to the unit and replacement of furniture. You may be able to deduct past rent, but there are cases (such as during COVID) where different rules may apply. In such cases, it is best to speak with your real estate attorney (especially if you evicted the tenant) or your Apartment Owners Association. As far as eviction costs and fees, check with your eviction attorney before you deduct those expenses.

LAST MONTHS RENT It is always best to charge the tenant a security deposit as opposed to a last months rent. One reason for this, is that even though you may have raised rents several times over a tenant’s tenure, their last months rent will still be the original move-in amount. Another reason is, that if the tenant uses their last months rent and then decides not to move, you will be left with no security deposit and you would have to sue in small claims court in order to recover damages.

“What you feel doesn’t matter in the end; it’s what you do that makes you brave.” – Andre Agassi

What we at PRS PROPERTIES CAN DO. We can give you a good idea of the current value of your building. We can suggest changes you might want to make before sale to give you an idea what type of building you would be able to exchange into. You may decide to stay in the rental business. We are always available to chat. We can give you referrals for professionals, such as lenders, contractors, and engineers, so that you can decide who you feel best with. We can supply you with rent and sale comparable in the area of your properties, so that you know what rental values are in your area. It is important that you know the true value of your rental units, so that you can get them rented right away at market value, or at least as much as possible with rent control restrictions. We can look at potential purchases that you may be interested in to make the property more desirable, and maybe look at potential issues that an insurer might require you to repair.

If you should decide to sell your building, we can help you exchange into a larger or smaller properties. We can even help you move into something with less management responsibilities. We can also help with getting the paperwork together for a refinance if that is your desire. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other easy and inexpensive changes that might allow you to get a higher value. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We are currently looking for “as-is” properties and are willing to purchase with low rents, deferred maintenance or even with a problem tenant in place. We can offer a 7 day escrow and all cash at closing. Give us a call. We have also put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are currently in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.