The Holding Deposit: Why it is Important to Getting Good Tenants
Why do we give tenants 30 days to move in with a holding deposit? This is an important question because owners want a tenant in their unit NOW. Or they want a tenant in it a week from today at the most. In this post we will explain why you DO NOT want a tenant that can move in tomorrow.
The Leasing Question
Often when a client comes to us with a property, one of the questions we receive is “How do you do your leasing?”. Usually, we discuss advertising, showing, lock boxes and stuff like that. But the part of the process that doesn’t get the attention that it deserves is what happens AFTER you approve an applicant to live at your rental property. There are a lot of steps that not only the owner or the property manager need to do, but also things that the tenant is responsible for.
Before a tenant can move into one of our units, we confirm that the utilities have been switched. Depending on the municipality that you live in, this can be an easy process or complicated process.
One of the things that any good tenant is going to have to do is give their current landlord a notice to vacate. Every single landlord out there who’s been in the business for a week knows that there’s some kind of notice required to terminate a lease. The normal length of time for that notice is 30 days. So a good tenant is going to give their current landlord a 30 day notice and that tenant is going to be liable for rent for 30 more days to their current landlord.
Think about that for a minute. Think about all the tenants and all the leases that you have written as an owner or property manager. When a tenant goes to move out what’s the first thing you tell them? That you need 30 days notice and rent is due until they move out, right? We respect that and we consider that as part of the screening process . If a prospective tenant comes to us and they give 30 days’ notice, then we feel more comfortable that they are going to give us the same respect when they move out of our property.
Why a Quick Move in?
When you start leasing to people who need to move yesterday or NEED to move out this weekend, there are a lot of red flags that come up. Every time somebody tells me this, I ask myself, “Why do they have to move this weekend?” Are they getting evicted? Are they trying to avoid court? Do they not care about paying rent to their landlord?
There are a lot of unknowns that come along with a tenant who’s ready to move in right now. It’s a higher risk to accept someone who can move in quickly then it is to accept someone who has given 30 days’ notice and wants to move in 30 days. You can try to figure out why that person needs to move, but the reality is sometimes people lie. You may not figure out until is too late and you have a bad tenant in your property.
The Legal Issues
Deposits and fees are touchy subjects when it comes to landlord tenant law. Different states call these monies different things and it’s important you understand the technicalities in your state. Here you can read Michigan Landlord Tenant law in how it relates to Security Deposits.
Holding Deposits at Access
Because we understand the importance of a 30 day notice, we have incorporated it into our leasing process. When we approve a tenant, they pay a holding deposit. We then give them 30 days from the day they paid the deposit to move in. Often it is a month before someone moves in after they have been approved.
Why This Leads to Success
We have a lot of success in leasing for our clients For the most part, we don’t get complaints about holding deposits, but every once in a while it does come up. So I wanted to make it clear that this is our process for leasing units efficiently and effectively.. If you have questions that I have not addressed here about the leasing process or holding deposits, please fill out our contact form or give us a call at 616-301-9450. We are always happy to talk.
Other Leasing Blogs
Check out our other blogs that focus on leasing topics: