Why Are Security Deposits Important for Landlords?

Why Are Security Deposits Important for Landlords?

The monthly rental rate in Hawaii's real estate market has climbed by 13% between 2019 and 2022. However, the monthly rental cost of your rental properties shouldn't be the only factor considered when pricing your Hawaii rental property. Successful landlords also consider their rental deposits. 

Find out why security deposits are so important and how to determine how much you should charge.  

What the Law States 

Hawaii landlord-tenant law outlines if and how much a landlord can charge their tenants for the security deposit. It's crucial that you follow the letter of the law, or you could risk a lawsuit from a tenant. 

The law states that you are allowed to charge a security deposit. However, it also states that the security deposit cannot be more than one month's rent. At the end of the rental period, you have 14 days to return any unused portion of the security deposit. 

If you decide to keep any portion of the security deposit, you must inform the tenant in writing of why.  

Why Asking for a Security Deposit Is a Must 

Asking for a security deposit upon leasing signing is crucial because it protects you and your investment. It gives you a sort of safety net and a show of good faith from the tenant. 


Anyone managing a rental will tell you that cleaning is a large part of the process. Charging for cleaning not only ensures your property is ready for the next tenant but it also discourages your current tenant from making a mess of your property. Taking the cleaning fee out of the security deposit reduces your overhead costs. 

Unreturned Keys 

Wouldn't it be nice if all tenant's returned the keys when they moved out? Sadly this doesn't always happen. 

Property Damage

You cannot use your tenant's security deposit for gradual deterioration. This is a normal and expected part of owning property. You also can't charge the tenant for damage that is beyond their control, such as storm damage. 

However, you can charge the tenant for damage that they caused. You shouldn't be stuck paying for damage that the tenant is responsible for. 

Outstanding Rent 

If the tenant breaks the lease early or the lease ends, and the tenant still owes rent, you can collect it from the security deposit. Keep in mind that the security deposit can't be more than one month's rent, so your recovery with this method is limited. 

Tenant Screening 

The key to being a successful rental property owner is placing the right tenant in your rentals. Asking for a security deposit is a natural method of screening. Asking for a security deposit can discourage those who can't afford the property from applying. 

However, you cannot use the security deposit as a method of discrimination that would violate the Fair Housing Act. If you're unsure, it's helpful to speak with a property manager who can clarify what's acceptable and what's not. 

Ask Your Tenants for Security Deposits

As you can see, it's time that you ask for security deposits for all of your rental properties. This one-time payment will protect your investment and help reduce overhead costs. 

Reach out to our knowledgeable property managers to find out what a little professional help can do for your rental property. 

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