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I am a newbie owner. I have the damage fee of $69 included in the fees for renters to cover any major damage that may occur. Does anyone do this and also include a refundable deposit for the misc expenses that can occur? For example, I have in my rental agreement that if they do not checkout by 10:30 a fee of half the daily rent will be charged. Now I am unsure how I would charge this if they paid through reservationmanager. I do not have any access to their cc or anything. Also I am worried that a renter pays $69 upfront and then does not worry or care about the damages since they did not pay a larger refundable deposit. Any ideas will be very helpful.
Hello, it's Beth again, your fellow newbie owner. I, too, was concerned about whether guests would feel as responsible if it wasn't their own $$ on the line for extra expenses, so I decided NOT to offer the damage insurance. I offered it as an option on my first couple of quotes and then, after more reading here on the forums, decided to just go with a straight security deposit. Luckily no one took me up on those quotes ;-)
I'm no expert but I would guess that you cannot make a claim for extra rent for late checkouts through the insurance. Hopefully someone who knows more will chime in.
You could have a refundable deposit to cover specific charges which are not covered by the damage waiver, but I suspect you are correct that guests would balk at paying both a refundable security deposit and a non refundable damage waiver.
Regardless whether you have a deposit from which to withhold funds, you can bill a guest for charges incurred. Of course the guest may not pay the bill voluntarily, and then you could sue in small claims court (in most cases it would not be worth the trouble to do this) or you might refer the debt to a collection agency and have it reported to credit bureaus. The threat of a hit on the guest's credit report may be enough to elicit the payment, and this may give you the protection you would want from the refundable security deposit.
A gratuitous comment: You say that your rental agreement provides that guests who do not check out by 10:30 are charged a fee equal to 1/2 day's rent. This may be perfectly okay, but if you have not done so, check what your local law says regarding holdover guests. Here in Hawaii state law provides for a daily charge essentially equal to double the daily rate. In your location, the law may prohibit such charges, may be silent altogether, or may allow a greater charge. There would be no reason that you, as owner, could not charge a fee less than the law allows, but I would not want to limit myself. If a guest failed to vacate on time and the next guests were arriving the same day, I might find it necessary to pay for other accommodations for the arriving guest, and I would want to have recourse against the holdover guest to recover my full expenses.
Like Beth, I do not utilize damage insurance and collect a refundable security deposit from my renters. My reason for this is that I want the renters to have their own funds at "risk" via the damage deposit to encourage them to be more careful. If they have already paid a relatively small, non-refundable damage insurance fee, I don't believe that they have any incentive to be take good care of the property.
When we first started renting, we had to honor 3 months of rentals with a local management company. That company only used the damage insurance and did not collect a security deposit. It was a nightmare! We had things broken - a lamp, an end table, a rocking chair, an area rug. Guests did not seem to care when their own money was not on the line. We were able to collect only on one insurance claim - the rocking chair, being told in some cases it was normal wear and tear and in other cases that the damage was purposeful not accidental. After we were able to take over ourselve, we required a $500 secuirty deposit. We have not had one thing damaged since then other than a few soiled towels and we just absorb those as the cost of doing business. Our guests seem to be much more careful with our home when their own money is at risk.
Thanks for all the info! I will be changing over from insurance to collecting a refundable deposit. I do have 3 different guests in the next couple of months that paid $49 for insurance. Can I go back to them and ask for a refundable deposit? They each have paid half the rental cost for their stay. Or do I just hope nothing terrible happens during their stay and not ask?
No, you already have made your arrangements with these three rental parties. You cannot go back to them now and try to change the terms of your agreement. In all likelihood, everything will be fine.
Thanks. I thought so. I have been researching and people can dispute charges on their credit card. So is it best to have them pay the refundable deposit by check? Right now I have all the payents going through VRBO's online paymant. I wonder if I can continue to have them pay for the rent and tax online and mail me the refundable check. Would renters balk at that? Do most owners take the deposit by cc or check?
For different viewpoints on whether you should have guests pay their damage deposit by credit card or check, look at the current thread on this Community page entitled "How to Handle a Security Deposit by Personal Check." I personally handle all my financial dealings with renters by check. (If you read the different postings in that thread, one person thinks that not accepting credit cards is "archaic.")
I think that any owner's decision whether or not to accept credit cards depends upon their individual situation and the market in which the property is located. My property is on the coast of rural Maine. My minimum stay is one week. My property books far in advance. (I am currently completely booked for next summer.) Waiting for checks to clear is therefore not a problem for me. If your property is located in an area where you are likely to get "last minute" bookings (i.e., less than 30 days before the rental commencement date), you will need to accept credit cards.
When I have a person who wants to rent my property, I e-mail them a booking confirmation letter and rental agreement. The booking confirmation letter clearly states that in order to hold their reservation, they must return the signed rental agreement along with a check for 50% of the base rent and 50% of the Maine State Lodging Tax within seven calendar days of the date of the e-mail. The booking confirmation letter also states that if I do not receive the signed rental agreement and check within seven days, the reservation is cancelled and the property will be made available to rent to others. The booking confirmation letter also states that the remaining 50% of the base rent and lodging tax along with the cleaning fee and security damage deposit are due no later than 45 days before the rental commencement date. (I also send each renter an e-mail reminder about the final payment coming due approximately two weeks before the due date.)
If you want to accept rent and tax payments by credit card yet require that the security deposit by paid only by check, you have to think about the logistics of handling this. If a renter can pay the rental fee and tax by credit card, they may find it odd that they have to mail you a check for the security deposit. My thoughts are that if you accept a credit card payment for the rental fee and tax, you should accept a credit card payment for the security damage deposit as well. This is just my reaction to your proposed system - other owners may have such a bifurcated system that works well for them.
Concerning those three guests with the "damage insurance.
No you just can't just unilaterally change them to "security deposit".
But there is nothing to stop you from offering the choice to them. They may prefer to have the $69.00 and be responsible for damage.
Jst explain that you are no longer using the agent that used the insurance method and are now using he deposit method for new rentals. They are free to stay with the terms of the original agreement, or if they prefer, can go to a damage deposit method.
Who knows what they will choose. My opinion is that whatever they choose, they will appreciate being offered the option.
I'm new to renting. That said having a security deposit of $500 would seem to make guest more responsible. What do people think about the deposit AND insurance? It's only $50. First 500 in damages on them then the insurance would kick in. Is there a deductible? Seems to me this would tick people off or if you have some really bad renters just encourage them to keep going over the edge. I wish VRBO would let US buy the insurance in secret. That way renters are held responsible but we would be covered in a worst case scenario. Thanks Raz