Financial Matters Managing Your Vacation Rental

Vacation Rental Security Deposits – Too much or too little?

Written by Elizabeth Weedon
4.7/5 - (16 votes)

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 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?

About the author

Elizabeth Weedon

Elizabeth Weedon - Although I’ve worked for since 2008, I’ve been a loyal homeowner on the site since early 1998, just a few months after the website was launched by the Talmadges. I grew up summering on the Vineyard and managed my family's rental home there since the mid-1980’s. I’m passionately devoted to the Vineyard – and to WeNeedaVacation, which I credit with enabling me to hold onto the special property that has been in our family for nearly a century. An enthusiastic member of the WNAV Homeowner Support Team, I endeavor to keep my finger on the pulse of the Cape and Islands vacation rental industry so that I can provide homeowners advice about how to ensure their booking success with us. With owner Joan Talmadge, I am also responsible for editing and writing much of the text on our website, our monthly newsletters, and Homeowner Blog posts.


  • This is really quick and simple advice for those who have vacation rentals. Since the term lengths tend to be much shorter than a traditional rental property, many property owners fail to remember that damages and non-payments can still occur. Requiring a security deposit, even if a small amount, can help protect a property owner’s investment property significantly.

  • I know in MA that a landlord must deposit a sec deposit in an escrow account within 30 days of receiving it and must supply the renter with a statement of the account. It is unlawful to co mingle these funds with personal funds. Failure to do so would require a landlord to refund the deposit money immediately. Does this law apply to vacation rental leases as well that ask for a security deposit?
    Thank you.

  • It is so important to cross your T’s and dot your I’s from the get-go as a renter. Knowing the laws and having your procedures set in place from the start will help protect you and your property, because unfortunately, people can be very irresponsible with your home. I have heard of nightmare stories of GREAT damage from a renter’s wild night of partying, and a too low security deposit will leave you in the lurch. Important post!

  • Nice article Liz. I like the part where you say “Your lease should state when the deposit will be returned, but generally it is within 30 days of the tenant’s departure.” Sometimes the obvious procedures don’t seem so obvious, but still have to be maintained. I know some landlords that seem to forget that fact.