Where do you keep your tenants security deposits?

Question

Hi Everyone,

Right now, I have my tenants' security deposits in separate savings account at an online bank.  Is this how most people do it?  If not, can you share where you keep the security deposits.  Thank you in advance for your input.

~ Michelle

Ty Coutts · Answer

Hi Michelle,

Keeping tenants' security deposits in a separate savings account at an online bank is a common practice and is generally recommended. Some landlords also use escrow accounts for added security and transparency, especially if required by state laws. Additionally, interest-bearing accounts may be mandated in certain jurisdictions, so it's important to check local regulations to ensure you're handling deposits correctly. Hope this helps. Feel free to reach out if you have any other questions or would like to discuss!

Tom S. · Answer

@Michelle Hardy Just adding, check your local city too for their requirements, many have specific requirements that the state may not have.

Here in VT in the towns my properties are in, there is not a requirement to keep them separate or pay interest.  As such, I keep them in one account and just track any deductions with a spreadsheet for each tenant.  At the end of the lease term, it's a simple as printing that spreadsheet so it shows all itemized deductions from the security deposit.

Conor Brennan · Answer

There are also online platforms that will handle managing security deposit compliance, refunds, etc. like rentable.com

Michelle Hardy · Answer

Thanks, Ty.  I will research my market to find out what's required for my state.

Where do you keep your tenants security deposits?

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