Home For Owners/Managers Better Guest Experiences How Much Is Too Much? Security Deposits That Won’t Drive Vacationers Away

How Much Is Too Much? Security Deposits That Won’t Drive Vacationers Away


Guest blog by: Bonnie Dewkett

You want to provide your guests with a perfect vacation experience. But by renting your property to those you don’t know, you are also exposing yourself to risk. A security deposit is a vital component of protecting your short-term rental property. The trick is finding the balance between enough money to cover potential damages and an amount small enough to put renters at ease.

Know the Basics

Since your rental agreement may only be a week or even just a night, it’s critical that you include everything necessary to protect your investment. It’s a good idea to consult a lawyer when drafting your agreement and be sure to include a clear description of the property and key contents, conduct that is prohibited, and how the property should be left at the end of the agreement.

The first step in determining a security deposit amount is to understand the law in your city and state. Some states limit the amount you can require for a security deposit as a multiple of the rent. Other states have no limit at all.

Here are some things to consider when deciding exactly how much to charge for a security deposit.

  • Price of Rent — Consider your weekly or daily rate when determining the right security deposit amount for your rental. Standard practice calls for 10 percent of the rental rate or $250 flat, but every property is different.
  • Value of Property — A rental property with expensive fixtures, countertops and appliances will require a higher security deposit. If something is damaged or broken, it will be costly to repair. Receipts from installation and remodel projects can help you substantiate a heftier security deposit. 
  • Furnishings — The amount of your security deposit should take into consideration how your rental property is furnished. Furniture will often show wear and tear more quickly than other parts of the home and therefore need to be replaced more frequently. If you have a high-end rental with luxury grade furniture, take that into account when setting your deposit. Keep the receipts from furniture purchases to help establish a reasonable security deposit and proof of value should something need to be replaced.
  • Rental Instructions — Be sure to set clear expectations on how your guests should leave the rental upon departure. Leaving detailed instructions will help them understand your expectations and perform the tasks thoroughly. Print out instructions for areas such as the kitchen, laundry room and bathrooms, and put them in page protectors. Store them where they can easily be seen.

Another option is to print out all of the instructions for your rental property and then store them in a binder. Note the location of the binder in your rental agreement. Making cleaning supplies available will ensure that guests have no excuse for not leaving it to your specifications. Additionally, it protects you from anyone using cleaning chemicals that are not appropriate for your space.

  • Documentation — In order to set your guests at ease, be transparent in your security deposit policies. Be clear about what you’re charging and why. Provide examples of property damage or excessive cleaning that may result in deductions from the security deposit. Show that their security deposit will be kept safe in a specific account and won’t be touched until the rental agreement ends, however long or short that might be. When renters feel that they have a complete understanding of the circumstances in which their security deposit may be used, they will feel comfortable writing a check.
  • Market Standard — Local real estate agents, lawyers, and other landlords can help you determine the appropriate amount to collect as a security deposit. To keep the marketability of your property in line with others, it is important to understand what is normal and customary in your area.

Do research and see what other short-term rentals are charging as a security deposit so that you are protecting your assets and still maintaining an attractive property for renters. You should also listen to your customers. Ask for feedback and read your online reviews to understand if you can make small changes to put future renters at ease.

  • Other fees — Are you also charging any other fees for cleaning or pets? These should be considered as well, since you don’t want to scare off renters with too many costs above and beyond your standard rates. 

When dealing with security deposits, remember to be fair to your renters, recognizing that normal wear and tear is to be expected. Don’t forget to refund the security deposit to anyone who leaves the property in good condition—most states define when you need to refund the deposit, which may be as few as 14 days. Treat your guests as you’d want to be treated, and they’re likely to choose your property for their next vacation and encourage their friends to do the same.


About the Author

Bonnie Joy Dewkett is a professional organizer and writer for Quill.com. She shares cleaning & organizing tips for homes and businesses alike as The Joyful Organizer.