Security deposit for a furnished month-to-month SFR

Nashville, Tennessee
General Landlording & Rental Properties
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Security deposit for a furnished month-to-month SFR

Michael Voronkov
Investor · TN · Member since 2015 · 5 posts · 1 vote

I looking to list my fully furnished, 3bd/2ba house for a month-to-month rental (1 month minimum), but not sure about the security deposit.
One month's rent seems like a lot of money for someone who only wants to rent for a few months.
Is there a rule of thumb?
Thanks in advance!

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  • Lucas Miles
    Rental Property Investor · Fairmont, MN · Member since 2019 · 184 posts · 123 votes
    2y

    @Michael Voronkov we do 1-year leases that then convert to M2M after the first year term. Going directly to a M2M lease is likely not beneficial to yourself or the tenant. We will do short term leases 3 months but will typically charge 2X the normal rent, for 6 month lease 1.5X the normal rent. High vacancy will eat into your cash flow quickly!

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  • Michael Voronkov
    OP
    Investor · TN · Member since 2015 · 5 posts · 1 vote
    2y
    Hi Lucas, thanks for the response!
    I am not looking for a typical 12mo lease that converts to m2m.
    The house is in an area with solid demand for short-term (1-4 mo) stays.
    It's been booked solid through AirBNB at $3.3K/mo for the last 3 years with 1 month as the minimum stay. Now that AirBNB market is softening, I'd like to lower the price for the guests advertising it directly, without AirBNB, at $2.7K, which is at least $800 higher than a typical 12mo lease rate.
    Hence the dilemma on the security deposit.
     
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  • Michael Voronkov
    OP
    Investor · TN · Member since 2015 · 5 posts · 1 vote
    2y
    Quote from @Lucas Miles:

    @Michael Voronkov we do 1-year leases that then convert to M2M after the first year term. Going directly to a M2M lease is likely not beneficial to yourself or the tenant. We will do short term leases 3 months but will typically charge 2X the normal rent, for 6 month lease 1.5X the normal rent. High vacancy will eat into your cash flow quickly!

     @Lucas Miles, thanks for the response!
    I am not looking for a typical 12mo lease that converts to m2m.
    The house is in an area with solid demand for short-term (1-4 mo) stays.
    It's been booked solid through AirBNB at $3.3K/mo for the last 3 years with 1 month as the minimum stay.  Now that AirBNB market is softening, I'd like to lower the price for the guests advertising it directly, without AirBNB, at $2.7K, which is at least $800 higher than a typical 12mo
    lease rate.
    Hence the dilemma on the security deposit

    0Reply
  • Justin BrickmanBusiness Member
    Realtor · San Antonio, TX · Member since 2021 · 503 posts · 274 votes
    2y
    AirBnb has such a good insurance policy that I usually don't require a security deposit, unless they have pets. I usually do $1000 or $1500 refundable if so.
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  • Michele FischerPro Member
    Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
    2y

    I don't do short term rentals, but since it is fully furnished, there is more that could be damaged, so I would take that into account.  It is unlikely that you would be able to collect damages beyond the security deposit, so the security deposit lowers your risk and should be high enough to be helpful.

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