When it comes to vacation rental security deposits, the question is not whether to require them, of course, but how much, right? Certainly all homeowners should indeed require a security deposit: not doing so removes any financial incentive from your tenants to leave your home in good condition and also deprives you from recouping any costs should there be any damage.
What to charge
The majority of homeowners listing on WeNeedaVacation.com require security deposits between $200 and $500. We would discourage you from charging any less than $200 as it doesn’t take much damage to exceed that amount. If you charge over $3000/week for rent, you probably should ask closer to $500 for a security deposit. Naturally, if your weekly rental is, say, over $5,000/week, or if you have some very valuable furnishings or artwork, it may be prudent to require as much as a $1,000 security deposit.
When to return it
Your lease should state when the deposit will be returned, but generally it is within 30 days of the tenant’s departure. Your right to retain any part of the security deposit is dictated by the terms of your signed lease, but it is usually appropriate to do so for repairs and damage that go beyond normal wear and tear.
How to communicate damage
If tenants violate your lease in some way, you must inform them of the specifics of the violation soon after their departure, preferably within a few days. Otherwise, they may question whether the damage was caused by a subsequent tenant.
For more information about vacation rental leases and payment schedules, see our recent blog posts, “Does your lease provide adequate protection?” and “Booking Payment Schedules.”
Do you feel adequately protected by your security deposit? Do your tenants ever balk at the price of your security deposit?