If you own a vacation rental property, you may be wondering whether you should charge guests a damage deposit.
Do you currently require rental guests to pay a damage deposit for your vacation rental? Or do you forgo this option because you believe they will not cause any damage to your property?
Not collecting a damage deposit from your rental guests is not beneficial to your business. Even if they stay short-term, your guests may still cause damage to your property. On the other hand, there are several advantages if you collect a damage deposit.
You can decide how much to charge depending on the specifications of your house and your house rules. Having a damage deposit will also encourage your guests to be more responsible for the property during their stay. In this article, you’ll learn the best practices regarding damage deposits.
Do’s for Vacation Rental Damage Deposits
Outline Clear Rules for Your Property
Make sure you have detailed house rules for your vacation property. The house rules should inform your guests what is allowed and what is prohibited inside the property.
You should mention which offenses will result in the partial or full forfeiture of their damage deposit. It’s also important to indicate how you plan to return the damage deposit to your guests.
Provide as many details as possible in the house rules. This will ensure that your guests know what the regulations are and how to avoid violating them. It will also give your guests a clear idea of how you expect the property to look when they leave.
Set an Ideal Deposit Amount
You can set the amount of the damage deposit in two ways. The first one is a fixed amount. In this case, the deposit amount will remain the same regardless of how long your guests stay on your property. You can set your fixed amount based on the rent amount, the amenities you provide, and the local market.
On the other hand, some property owners choose a percentage of the rental price to determine the deposit amount. This will take more calculation on your part than a fixed amount, as it will depend on the length of guests’ stays. You can choose this option if it ends up being higher than the fixed amount.
Process Damage Deposits Immediately
It’s essential to carefully list the damage deposit in your guest’s booking invoice. Doing so will help you properly document your guests’ payment, especially if they paid in cash.
If a different payment method is chosen, you should immediately cash the check or charge the credit card. This will help you avoid the possibility of having incorrect bank account details or bounced checks. You’ll also get a chance to confirm your guest’s information again.
Maintain a Good Relationship with Housekeeping Staff
There will be time when your guests fail to report accidental damage to your property. They may think the damage is minor, not requiring immediate attention.
Because of this, you should maintain a good relationship with the staff who cleans your property. The housekeeping staff will usually be the first ones who visit your property when your guests leave.
Housekeepers can make a quick inventory of the property and report to you any damage or accidental breakage. This way, you can deal with the damage promptly.
Be Aware of Existing Property Damage
Insisting on proper maintenance and upkeep for your property is one of the keys to preventing damage that isn’t caused by your tenants.
It may happen that your previous guests damage your property and you’re not able to make repairs before the next guests check in. In this situation, you should be honest with your new guests and inform them of what occurred.
Then you can offer your guests an incentive to make up for the damage. You should keep all receipts of the incentives and deduct the amount from your previous guests’ deposit.
Keep Photo Evidence
It’s essential to take high-quality photos or videos of any damage caused by your guests. Photos are useful evidence if your guests try to dispute your claims. You can also provide your housekeeping staff with cameras.
They can take photos and record any damage done to your property when you’re not around. You can choose to leave the camera in a locked cabinet on your property as well.
Don’ts for Vacation Rental Damage Deposits
Forget to Return the Deposit
In every state, it’s illegal to keep the damage deposit without any valid reason. In Colorado, landlords have one month to return the deposit. This period may extend to sixty days if a written agreement has been made, but it can’t exceed two months.
If you forget to refund your guest’s damage deposit, they might give your property a negative review. Other travelers could decide not to choose your vacation property based on a single negative review.
Treat Damage Deposits Like Extra Income
Keep in mind that you collect damage deposits to cover repairs, especially for severe damage. As a vacation rental owner, you should not misappropriate the damage deposit as extra income.
Some household items are more prone to damage, such as glasses and cups. You can easily replace these items without charging your guests a high amount.
Retain the Deposit Without Valid Reason
It’s your responsibility as the property owner to return the damage deposit to your guests as soon as possible. If your property incurred damages because of your guest, you need to keep a receipt of all the repairs done.
If you don’t provide a receipt, you won’t be able to charge repairs to your guest’s damage deposit. This is why it’s essential to keep track of every receipt as proof of the repairs you did.
The Bottom Line
It’s wise to collect a damage deposit from your guests to keep your rental property in top condition. Collecting a damage deposit will also give you peace of mind, because you’ll know you can repair damages immediately.
Looking for help with your Summit County, Colorado vacation rental? Bighorn Rentals has been providing expert vacation rental property management services for years, and we have the expertise to get your investment performing at the highest level.
