Damage/security deposits for STR’s?

Question

Reading another post about people stealing items in STR’s got me thinking about damage or security deposits. Do you use one? If so, does it work? If not, why? How much do you typically “hold”? How do you handle stolen items and this deposit. Very curious to know.

Sean McDonnell · Answer

On VRBO, you can have your guests pay a damage deposit. You set the amount and VRBO requires it from the guests. If you do not file a claim in I think 7 days after their stay, the damage deposit is refunded to the guest.

Overall, I would not let the fear of guests stealing things act as a barrier to you getting into STRs. We have been hosts for three years now and have never had a guest steal anything. Remember, the guests are competing for good reviews too!

Luke Carl · Answer

@Wesley Myers I totally agree with @Sean McDonnell you're worrying about something that doesn't matter. On one hand, you've got someone stealing a 20-year-old junk lamp. On the other hand, you've got long-term wealth and your family's future.

When you start building your listings they will give you damage deposit choices. I don't believe theirs a wrong answer in this category. Just pick what works for you. I have hosted over 2000 stays and I have not one time filed a claim against a deposit. It's a great way to get a bad review.

Paul Sandhu · Answer

I don't mess around with a security deposit on my 23 STRs, and I've had about 1800 previous tenants.  Sure, some things go missing but that's a cost of business.  If you add up all the beer, food, specialty clothing and tools that gets left behind; it more than offsets the cost of things that went missing.  My best leave behind was a broken car.  I called the metal recycler to pick it up and got $200 in cash the next day.  Another time I found some scrap copper.  Took it to the metal recycler and got enough cash to buy a keg.

Angelo Forzano · Answer

@Wesley Myers. I'm curious what did they steal? I have str,s also and I think someone stole a firestick but with multiple renters in a row I don't know . the TV kept working but can't find the firestick lol. I charge $500 security . I don't cash the check with the payment for the rental I hold it and  only use it for damages. The cleaning service I use  for the last 4 years have been taught to walk the property and look for obvious damage...  a broken chair laying on the floor is obvious damage a crack across the TV is obvious  then I'll contact the renter and have a discussion. I have chachki stuff hanging up to make the place look good in pictures so again I'm curious what do you think was stolen ? I doubt you had any high value items there or mementos, for cheaper items I would let it slide as it's the cost of doing business. I rent a beach house to families with children, their my bread and butter many times we find crayon doodles  along the window sills or on the ceramic floors I  paint over it or scrub it out. I'm not charging my guests for paint or elbow grease when their paying top $

John Underwood · Answer

I agree that its not worth worrying about. I had a $300 security deposit. Vrbo recently stopped having the renter pay that up front but you could still file a claim for damages up to your security deposit. So I changed my deposit to $500.

The renter don't actually get charged this up front so it doesn't matter to them, but if there was some actual damage I can charge up to the $500 now instead of the lower $300.

Luke Carl · Answer

$100 for property worth under 500k

$200 for property worth over 500k.

Adolfo Flores · Answer

Hi @Valerie Rogers and anyone else who knows. Do you set up the $59 waiver fee on your own or do you do it through Vrbo's "Accidental Damage Protection?" If you do it on your own how did you do it? Thank you.

Valerie Rogers · Answer

We self-insure by charging a non-refundable $59 Damage Waiver fee. It covers up to $1000 of accidental damage.

The good part of this is that WE get to decide what is accidental and what was caused by negligence (if they break the terms of our rental agreement by having pets, smoking, having a party, etc.) We are not at the mercy of an insurance company's decision of whether to pay a claim or deny coverage because the damage was not accidental (in their opinion).

If there is accidental damage less than $1000 it is a better conversation to have with the guest when we can say "Don't worry about it, accidents happen and this is covered by the damage waiver fee that you paid" than to try to collect the expense from them to cover the damage.

Since 2016 we've never had any accidental damage that exceeded $1000....$300 is the most we've had (a broken TV). Other "damage" that we've had to use funds from this account to pay for were small things like a new coffee pot (when the lid was melted in the dishwasher), a new set of sheets that were damaged by a wet bathing suit bleeding red dye, and a new twin mattress when a special needs child accidentally wet the bed.

We've collected about $34,000 in damage wavier fees by now.

Michael Baum · Answer

We charge a $500 security deposit. They have skin in the game for damages and excessive messes. I have zero issues with it.

As far as stuff gone, waffle maker, a few beach towels, etc. Nothing crazy.

Erik Stenbakken · Answer

Nope. Our first STR operated with deposits and when we bought it, we agreed to leave the first few visitors in place. At closing, we got a list of the deposits we had to return. I thought, "What the? Am I going to do this 100x  per year?" Thankfully no.There's a THIRD OPTION and that is damage insurance that the guest pays. It can be pretty inexpensive for the guest. As I understand it (correct me if I'm wrong), the guest is not dinged if the insurance is tapped for a repair. We have used that probably only one time per year per property and don't bother for anything <$50 or so. If it helps you sleep at night, ok. Is it necessary? IMHO, no. We may discontinue it to bring down guest costs.

Damage/security deposits for STR’s?

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