There are many decisions to be made when choosing to rent your Orlando vacation home on a short-term basis to holiday travelers. Some of these include whether to hire a property manager, how you should advertise your rental home, and the rental fee itself. Another decision to make is how much to charge your guests for a security deposit.
The security deposit helps to protect your short-term vacation rental. The challenge is figuring out the right balance between enough money to cover potential damages and a small enough fee that will put renters at ease.
No matter how long a rental agreement you set, whether it’s one or two nights, or two weeks, it’s crucial that you include everything you need to protect your investment. It’s always smart to consult a lawyer for assistance in drafting your agreement. You also need to include a clear description of the property and key contents, state what conduct is prohibited (such as no pets allowed – or loud music after 11 pm), and how the rental property should be left at the end of the agreement.
A local lawyer and real estate agents, like those at Team Donovan, can provide guidance as to how much you can charge for a security deposit in the state of Florida.
Here are the main things to consider before setting the security deposit amount:
What to Factor into Your Vacation Rental Security Deposit
Rental price – Factor in the weekly or daily rental rate when determining the right security deposit amount for your vacation rental. The standard practice is to charge 10 percent of the rental rate or a flat fee of $250, but every property is unique.
Property value – If your Orlando vacation rental features expensive fixtures, countertops and appliances, you should consider charging a higher security deposit since those items will be costly to repair should they be damaged or broken. TIP: Save receipts from installation and remodeling projects to substantiate a higher security deposit.
Furnishings – The type of furnishings you have in your rental property also factors into the security deposit amount, especially if you have luxury-grade furniture. Keep receipts from your purchases to help you set the deposit and prove the items’ value should something need to be replaced.
Other fees – Make sure you factor into the security deposit any additional fees you may charge rental guests such as for cleaning or pets. If these costs are too high, you may wind up scaring off renters.
Set Expectations about Rental Procedure
Be sure to set expectations for your rental guests about how they should leave the rental upon departure. Providing detailed instructions will help them understand your expectations and enable them to correctly perform any required tasks.
Print out instructions for areas such as the kitchen, laundry room and bathrooms, and place them in page protectors, and/or a binder where they can be easily seen. If you’re using a binder, make sure you note the location of it in your rental agreement so your guests can’t provide any excuses for not leaving the property in the same condition as it was when they arrived.
Be Transparent about Security Deposit Policies
It’s important to be transparent in your security deposit policies to set your rental guests at ease. State clearly what you’re charging for and why. Provide examples of property damage or excessive cleaning that may cause deductions from the security deposit.
You can also reassure your guests by showing that their security deposit will be kept safe in a specific account and won’t be touched until their rental agreement ends.
You can ensure repeat guests for your Orlando vacation rental and encourage good reviews by treating them fairly. Recognize that normal wear and tear is to be expected. And remember to refund the security deposit to anyone who leaves your home in good condition.
If you have questions about buying a home in Orlando to use as a short-term rental, contact Team Donovan today at 407-705-2616.