As you will see from the answers, there are many models out there and you will need to figure out what works for you. I take only checks, so I want payment in full at least 30 days ahead of the rental so the checks have a chance to clear. Owners who accept Paypal or credit cards can wait a bit longer if they want.
I ask for a $600 security/damage deposit on signing the contract. Then I ask for 50% of the rent to be paid 2 months out, and the remainder 1 month out from check in. I give a full refund of the deposit if the guest changes his/her mind 3 months ahead; if less than three months, I try to find other renters and refund whatever rent I can pull in at the last minute. Your full-refund date will depend on how far ahead renters in your area make reservations. If most places are booked 6 months out, you may need longer than 3 months. If most of your area's bookings are last minute, you can be more flexible. I used to give a full refund up to 2 months out until last year one of my renters for a prime mid-summer week canceled at the last possible moment -- and I was never able to re-rent that week, losing a big chunk of revenue.
I don't charge extra for cleaning, and I don't have to pay tax in my state, but I imagine that you'd need to charge the tax at the same time you get any payment upon which tax is charged.
I add the taxes, rental fee and cleaning together. 1/2 of that total is due at booking with the signed contract and the balance is due 30 days prior to check in.
Their damage deposit is run as an authorization on their credit card only on the day of check in.
If the checkin is within 30 days, all fees are due at booking.
This is my personal cancellation policy. Different owners require different dates:
Cancellation policy: A ninety (90) day notice is required for cancellation. Cancellations that are made more than ninety (90) days prior to the arrival date will incur no penalty except if deposits were made via credit card which would be $75. Cancellations or changes that result in a shortened stay, that are made within 30-90 days of the arrival date, forfeit 50% of the rental and deposit unless we are able to re-book exact days.
No refunds within 30 days unless we are able to re-book exact days.
Cancellation or early departure does not warrant any refund of rent or deposit.
I do not do a credit card authorization for potential damage. Rather, I collect a security deposit which the guest must pay at least 30 days prior to arrival, the same time that the balance of rent is due. The security deposit is fully refunded within 14 days following departure (that is the time specified by my state law, the time allowed for you to refund may differ) unless there has been damage.
Our policy is to require 50% of the rental fee to hold the booking, then the balance of the rental fee plus the 10% tax and the damage insurance fee is due no later than 30 days prior to arrival. Cleaning is included in rental. We accept check, money order, VISA or MasterCard.
Cancellation will always incur a 10% service fee even if we are able to re-rent to another party or reschedule the first's visit. If not, then we keep the entire deposit. We always urge travelers to take out trip cancellation insurance. Our contract is very clear on all these points and we also repeat the policies in all emails and phone calls.
I collect a $500 deposit and 1/2 of the total fee (rent, taxes and cleaning) at the time of booking. Then the balance is due 90 days prior to arrival. I have allowed people to pay the $500 deposit and sign the contrace and then make the first payment a few weeks later when they need to collect money from several other family members.
My home is a summer season New England rental and my practices reflect the seasonal nature of my location.
For reservations made before February 1, I require a 25% deposit.
On February 1 an additional 25% payment is due.
Eight weeks prior to a party's stay the remaining 50% of he rent and a security deposit of $500 is due.
The rent includes all expenses associated with my home: cleaning, provision of linens, household laundry service at end of stay, etc. There are not any taxes to break out. Rent is all inclusive.
My home typically books months in advance of the summer season; I woud think a year-round rental that has a tighter schedule of inquiries and bookings wouldl need a much shortened calendar of payments to be effective.
I do not have a cancellation policy per se; in over twenty years of renting I have had one family notify me of a possible cancellation due to hospitalization of a family member. We were working out an agreement for a partial refund when they determined the family member's health was improved sufficiently to not present a problem and they were able to visit after all.
I accept personal and bank checks.
Where is your property located and is it a year-round or seasonal rental?
I'm in Alaska and it's very seasonal, tourists are in town from mid May through mid September with the concentration in June July and August. I think I'm going to take 50% of the total rent, security, taxes and cleaning upfront and a cancelation policy of 100% refundable 60 days prior, 50% 30 days prior and no refund of rent if less than 30 days unless I can rebook the exact dates.
What do you think?
Thanks so much,
We use the property damage protection policy instead of security deposits and have only had one request so far from someone who wanted to put a deposit down instead of pay the $39 or $49 for the PDP. Using the PDP protects us for a lot more than the deposit would be AND it is MUCH LESS PAPERWORK, which is always good!
We collect a nonrefundable fee upon booking to discourage cancellations but nothing outrageous. If the booking is more than 30 days away, the nonrefundable deposit is slightly more than one nights' stay plus the PDP fee (since HA takes it on the first payment for some odd reason). The balance is due by 30 days before their stay. If they book within 30 days of their stay the entire amount is due and I make sure that they know it is nonrefundable. Taxes, pet fees (if applicable) and the property damage protection policy are spelled out in the quote. We do not charge extra for cleaning but we do have a 2 night minimum to help cover the cost (3 nights for holidays).
We have never had anybody cancel on us. We did have somebody who paid and thought they were unable to make those dates. I was going to offer other dates to them (instead of a refund, due to the high number of scams) but they worked things out so I didn't have to worry about it.
We accept credit cards ONLY. This cuts down on scams and paperwork. The reservation manager makes this very easy and when there is a problem (it happens occasionally) we use PayPal as the backup method.
Have you ever had to use the protection? I've been renting for a year, and only twice have I asked about covereage. I had a guest come in and they left the place a mess, I had to pay for extra cleaning. Not damaged, but bags of beer bottles, carpet cleaning, dirty dishes etc - way more than the expected norm. I gave up trying to get an answer when I called to ask if this was covered or not. It seemed it was not, only accidental damage. What if a guest steals? So far we've been very lucky, great guest, but one took some of the video games and movies taken. Again, not accidental damage so I could not collect on it. If I take the security deposit, I can at least deduct any extra cleaning and stolen items. Since the second incident back in September, when we have a pet, in lieu of a pet fee I take the accidental damage policy - in case the dog damages furniture or carpeting, PLUS the security deposit.
We require a deposit of $1000 to secure my home for guests vacation
50% is paid 120 days prior to rental
50% is paid 60 days prior to rental
We require $2000 security deposit which is included in the remaining two payments as well as $220 cleaning fee.
I am surprised to see a $2000 security deposit. The norm in my area is $250, but I charge $500. I've considered increasing that but suspect I would lose bookings as a result. I'm curious as to the average security deposit collected by owners if you can reply. Thank you.
ps - as a result of the new VRBO review process, I have yet to withhold anything from a security deposit after an analysis of cost/benefit (lost rentals due to a negative review). I haven't had any major damage however. Damned if you do, damned if you don't it seems.
I think security deposits are based on what is in each home. We have over $10,000 in electronics alone. Each of the 7 bedrooms has a 42"plasma, cd players, dvd in every bedroom, etc. I doubt very much that someone would clean out all the electronics in the house, but someone might very easily break a tv (cost to replace is $1000). So, depending on the electronics, furniture, etc in a home, this would dictate what sort of deposit. Also, $2000 separates the men from the boys and has our guests be more careful.
Up until a few months ago, I required a $250 deposit to reserve the requested dates which was then converted to a refundable damage deposit upon check-in. The remaining balance was due 30 and 15 days prior. I have since changed to adding the security deposit, cleaning fee and taxes to the rental amount, and requiring half the total balance upon booking and the remaining half due 30 days prior. Like sophie, if a booking is last minute (i.e. within 30 days) payment in full is due at booking. This seems to ensure that prospective guests are serious about booking your home. I just had too many issues with people telling me they were sending me a deposit and then have it never show. And like Marilyn said, it seems to separate the "men from the boys".
I find that different geographic markets have different norms, so be sure to check your competition. In Palm Springs, home owners with similar homes to ours tend to collect $300-$500 security deposit. A few charge as much as $750-1000, but they are the exception. We collect $300 for weekend and weekly rentals, and $500 for monthly rentals. We call it a "refundable security/damage deposit" to clearly differentiate it from just an advance payment-type deposit. We don't charge the deposit to their card until shortly before their check-in date (see details below). That's because we use Paypal's credit card processing system. One benefit of using Paypal versus Homeaway's credit card processor is that a refund processed within 60 days results in the credit card processing fees being reversed, too. We rent our 2 vacation homes enough that that those credit card fees add up to real money after a while. Further, usually we lump the security/damage deposit in with the second of their 50% payment (see below) onto one card charge, and Paypal makes it very easy to do a partial refund of just the security/damage deposit amount later; some processors don't support partial refunds. I don't think Homeaway's credit processor supports partial refunds, and like I said, I think they keep the original processing fee charged for any refundeds.
As for collecting money, we get a subtotal = base rent + Cathedral City (next to Palm Springs) wants 12% tax collected on the base rental amount + all the non-taxable fees (cleaning fee, pool heat fee, dog fee). Half that amount is due at the time of booking. We then invoice them (via Paypal) for the 50% balance + the refundable security/damage deposit 3 weeks before their check-in date - and that invoice is due 1 week before they check-in. In two years, we've never had anyone miss their payment due date. In Paypal, it's easy to send them an email reminder a day or two before the due date if they haven't already paid.
In the event that we are taking a booking that starts within 3 weeks, we'll usually require the entire amount including security/damage deposit up front. Because we include the security deposit in the second payment which is close to their check-in date, we're always refunding the security/damage deposit with the 60 day window so the fees get reversed, too.
Just FYI, in our fine print, we state that the security/damage deposit may be used to cover "excessive cleaning and excessive utility use". That discourages people from leaving the house too dirty and it discourages them from turning up the pool heat too high. We don't use deposit insurance-type products because (1) they usually exclude things like excessive cleaning/utility costs, and (2) we think it's unfair to charge the vast majority of our guests for something they typically won't need since they go out of their way to take care of our home.
In three years, with 2 houses, and tons of rentals, we have only had a handful of incidents where we have actually wanted to deduct something from the security/damage deposit. We don't bother with stuff that results from "normal wear and tear"; we just consider that the cost of doing business. In each, more serious case I have a phone conversation with the guest and it's my goal to get them to agree to a charge that is fair and reasonable. Sometimes I'll even ask them what they think I should charge them for something after explaining what I think it would cost to fix. After being "pleasantly/calmly confronted with the reality of the situation", I don't believe anyone has ever thought that I was unfair. Knock on wood -- we've never had a retaliatory/negative review as a result of those situations. In fact, a couple of them still left 5 star reviews partly because they were impressed with the professional and reasonable way things were handled. I would never just deduct money from a security deposit, send the balance with little to no explanation, and expect the matter to be closed - but I know a couple of my peers do just that! You never know how someone will react in a vacuum of information, and your reputation is riding on the line.
Hi Dear, what is the procedure for payment of the booking. Do you take half upfront and the balance within 15days of arrival or is it paid in full the day of booking ? Also do you collect the cleaning deposit, security deposit and taxes at the same time? please give full knowladge of this..
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1. Reservations made for 2013 prior to Jan 1, 2013, I take a minimum of $300 to reserve. The way I figure it is that I get the bottom line total for rent, taxes, and damage deposit, for example $2341.16, subtract $300, and see what's left. In this case it's $2041.16. I then take some amount from what's left that will leave 2 nice round equal payments. So for the contract I just sent out yesterday for the July 4 week of 2013, $341.16 is due within 7 days. I do not block the week off until we receive that check.
$1000 is due Jan 15, 2013 (this date will be the same for all reservations made in 2012)
$1000 is due 60 days prior to arrival.
2. Reservations made in 2013, half the total and signed lease agreement is due within 7 days of receipt of lease agreement. The other half is due 60 days prior to arrival date
3. In all cases, those who cancel, no matter when, can be refunded all funds they have sent MINUS $100 admin fee IF and WHEN their cancelled week is rerented for the full amount and we have received the full amount for the rerented week. In our area (Outer Banks) there is no problem finding renters, so all those who have cancelled in the past have received a refund....so far so good.
As for amount of damage deposit, in the past we have charged $200. For next year, we're raising it to $300 for all new renters. Repeat renters (we rerent only to those who have taken excellent care of the cottage and left it clean) are not required to pay a damage deposit. Our cleaner calls us at 9:30 sharp each Sunday when he arrives to tell us the condition of the cottage. This way we are able to send a refund check the day after they check out. In the example above, the renters are repeats from 2012, so a damage deposit was not included.
Here's a portion of my inital response to an inquiry:
For example purposes I've used a basic weekly rental fee of $1000.00
Base Rental fee (6 nights) = $1000.00
Tax (15%) = $150.00
Basic Cleaning fee =$75.00
TOTAL Rental Fee = $1225.00
Required Additional Damage Deposit = $200.00
CONFIRMING A RESERVATION:
Reservations made more than 30 days prior to date of arrival:
I require 50% of the base rental fee ($500.00), along with a completed Rental Application/Agreement. The balance of $725.00, along with the $200.00 damage deposit, is due 30 days prior to your date of arrival. No reservation is confirmed until the required paperwork is received, and payment has cleared.
Reservations made less than 30 days prior to your date of arrival:
I require full payment, a completed Rental Application/Agreement and the $200.00 Damage Deposit.
No reservation is confirmed until the required paperwork is received, and payment has cleared.
Hope this helps!
Your state's limit might be different for vacation/short term rentals vs. standard leases (typically for one year). One resource I found is: http://www.rentlaw.com/securitydeposit.htm
"Security deposit laws typically apply to leases of 1 year or more. State security deposit laws vary based on several factors. In general "short term" leases are excluded. Seasonal Rental, Vacation Rentals, Student Housing, Dorms, hotels and rooming house law may vary. Regardless, IF YOU GIVE MONEY to someone, know why and get a receipt. Learn more on Security Deposits here. Pick your state security deposit law."
NJ, for example, specifically excludes short term/vacation rental properties from it's security deposit laws.
I am not affiliated with this website. We have once vacation rental and several long term rental properties.
If laws don't apply to the maximum security depsoit, "the market" certainly will. If most people are charging $300 and yours is $1000 it is doubtful they would stay at your place unless they REALLY really liked it and had confidence that you weren't trying to rip them off. At least, that's what I would think. It has to be high enough to cover you but low enough to not make it a hardship on the vacationers, especially if it is not being charge to a credit card.
I think the determining factor on amount of deposit are the amenities provided at the house. If you have $10,000 to $20,000 worth of electronics, you cannot ask for a security despoit of $300. We typically ask for $2000 to $3000.
If the tenants are not problem tenants, this should not be a problem as the full amount of the money will be refunded. On the other hand, if these are problem tenants they will not rent from me and that is good. I don't need their security money nor do I need the headaches associated with the repairs or replacements needed.
Security deposits are for the purpose of keeping the tenants neat and orderly and honest.
That's the rule for a long term rental agreement, and i assume you are referring to a deposit on the rent, not a security deposit.
For a deposit on the rent for a short term or recreational lease (less than 30 days and terms differ state to state), 25% is customary in my area.
For a security deposit it is much less clear and owners determine the amount based on the quality and value of the rental property and furnishings.
For example, on a rental of $10,000 per week it might be $1,000 - $2,000.
On a rental of $5,000 it might be $500 - $1,000.
And so on.
Charging a month's rental deposit on a weekly rental doesn't make any sense.
Charging a month's rental deposit on a rental of six months may be appropriate.
There are many different deposit schemes depending on length of rental period, accepted practice in the local area, and owner preference.
But, no one is charging a month's deposit on a weekly or nightly rental and that's the business model we discuss, for the most part, in this forum.