Mid-term rental deposit, application fee, & rent collection

[Robert Calabro]

What do mid-term renters prefer when it comes to security deposit? I'm leaning towards a smaller non-refundable deposit vs a full month rent that is refundable. I would love to hear what others have experienced with it. 

Secondly, is it common to do a normal application fee for background and credit? My current platform charges $55. Should I keep doing this or is there something better for mid-term stays?

Lastly, what is the preferred method for collecting rent with mid-term stays? I'm currently using Avail.co for my long-term rentals. 

TIA!

[Jared Hottle]

This is a good question. I have had a few mid-term renters scoff at the full months rent but I also could see them not liking a non-refundable deposit. We have settled in around 1/2 of 1 months rent for deposit and seems to be working well.

[Allen Duan]

I can share what we do. We come from a background managing short term rentals, rather than long term.

We do a smaller refundable damage deposit of $500. Mid term stays are much shorter than long term so there should be less opportunity for damage. Of course, good screening will also help prevent bookings that are likely to cause damage.

We've never done application fees, but we also don't do credit and background checks. I think MTR tenants could be ok with this and it really depends on your business and how you plan to mitigate risk.

We collect rent through our property management system Hostfully. Again, this is a coming from the perspective of treating MTRs more like a STR rather than a LTR.

[Robert Calabro]

Thanks for the reply! I think a smaller refundable deposit is a good idea. 

[Drew Sygit]

Depends on where you are getting your prospects.

If from Airbnb, VRBO, etc. then they won't be expecting either.

If you are getting them from your own advertising, then put your requirements in your ads and definitely have on your website.

[Joshuam R.]

@Robert Calabro What are your fave reasons to use Avail , and your lessons learned from using it?

[Jonathan Hong]

Quote from @Allen Duan:

I can share what we do. We come from a background managing short term rentals, rather than long term.

We do a smaller refundable damage deposit of $500. Mid term stays are much shorter than long term so there should be less opportunity for damage. Of course, good screening will also help prevent bookings that are likely to cause damage.

We've never done application fees, but we also don't do credit and background checks. I think MTR tenants could be ok with this and it really depends on your business and how you plan to mitigate risk.

We collect rent through our property management system Hostfully. Again, this is a coming from the perspective of treating MTRs more like a STR rather than a LTR.

Question, what SD would you suggest for 6 month stays and if they have pets (Large dog @ 70lbs and a small dog @ 8 lbs)? I have a prospective contractor who scoffed at my 1.5x the rental rate for the SD when it was a 12 month lease and was also concerned about signing a 12 month lease in case their contract ended earlier. I suggested a 6 month lease instead. If it was a 12 month lease, I wouldn’t require a monthly cleaning but at 6 months, I would like to make it a requirement. 

[Allen Duan]

@Jonathan Hong I would be comfortable with $1000, but you have to decide what your risk tolerance is with this. Think about what could go wrong and how much you would need to cover it. Don't worry about what the contractor thinks or says, you have to make your own decision and they don't know your business and all the specifics you have to consider.

[Jonathan Hong]

Quote from @Allen Duan:

@Jonathan Hong I would be comfortable with $1000, but you have to decide what your risk tolerance is with this. Think about what could go wrong and how much you would need to cover it. Don't worry about what the contractor thinks or says, you have to make your own decision and they don't know your business and all the specifics you have to consider.

Thanks for your insight! I also should have mentioned that I charge a $300 non refundable pet fee per pet as well. I had the worse case scenario in mind but also wasn’t sure if I was charging too much or too little. I might have been charging too much. This property is in TX. It’s been radio silent thus far. 

[Kelly Johnson]

Quote from @Jonathan Hong:

Quote from @Allen Duan:

@Jonathan Hong I would be comfortable with $1000, but you have to decide what your risk tolerance is with this. Think about what could go wrong and how much you would need to cover it. Don't worry about what the contractor thinks or says, you have to make your own decision and they don't know your business and all the specifics you have to consider.

Thanks for your insight! I also should have mentioned that I charge a $300 non refundable pet fee per pet as well. I had the worse case scenario in mind but also wasn’t sure if I was charging too much or too little. I might have been charging too much. This property is in TX. It’s been radio silent thus far. 

[Kelly Johnson]

@Jonathan Hong, what if only part of your pet deposit was non-refundable? Inevitably you have to clean a little different if they have a pet so that costs money but if they haven't destroyed something then $300 is a little steep. Maybe $100 non-fundable and $200 refundable. 

[Jonathan Hong]

Quote from @Kelly Johnson:

@Jonathan Hong, what if only part of your pet deposit was non-refundable? Inevitably you have to clean a little different if they have a pet so that costs money but if they haven't destroyed something then $300 is a little steep. Maybe $100 non-fundable and $200 refundable. 

I might be able to swing that. Do you charge pet rent on top of the deposits or just the deposit is good enough? I figure that pets will require a more thorough cleaning anyways so any type of deposit is going to be used towards that. 

[Kelly Johnson]

Pet deposit is separate from a regular security deposit for me. I think most pet owners expect that. 

[Matthew Masoud]

Quote from @Robert Calabro:

What do mid-term renters prefer when it comes to security deposit? I'm leaning towards a smaller non-refundable deposit vs a full month rent that is refundable. I would love to hear what others have experienced with it. 

Secondly, is it common to do a normal application fee for background and credit? My current platform charges $55. Should I keep doing this or is there something better for mid-term stays?

Lastly, what is the preferred method for collecting rent with mid-term stays? I'm currently using Avail.co for my long-term rentals. 

TIA!

 This is how we do it for our own mid-term portfolio and for the ones we manage.

1. $600 refundable deposit for anything over 31 days. In 3-years in the Mid-Term rental space and 100s of reservations, we've never had to use it.

2. We give them two options for screening. they can either provide documentation that they are traveling for their job or they can pay for tenant screening. You've got to find a cheaper platform though because $55 is fairly steep ours charges $35.

3. We use hostaway in combination with doorloop to manage mid-term rentals. Hostaway is a short term rental software but with enough finagling you can get it to work for mid-term as well. Doorloop is for maitaince requests, reporting, and overall operations. We are able to run pretty well with over 100 mid-term units on these platforms.

The mid-term space is super new so we are all kind of finding out footing together at the same time. 

[Sandra McEwan]

Quote from @Joshuam R.:

@Robert Calabro What are your fave reasons to use Avail , and your lessons learned from using it?

 Hey @Robert Calabro  I like Avail mostly because it's user friendly.  It's quick to set up tenants and also, you can create your own lease on there which i have done.  One thing I do not care for is that the communication with tenants is not easy to do on the platform.  THey would need an app and they don't have one.  Email seems to be easier than loggin in and sending a message.  Hope that helps.

[Kyle Moffat]

Quote from @Allen Duan:

I can share what we do. We come from a background managing short term rentals, rather than long term.

We do a smaller refundable damage deposit of $500. Mid term stays are much shorter than long term so there should be less opportunity for damage. Of course, good screening will also help prevent bookings that are likely to cause damage.

We've never done application fees, but we also don't do credit and background checks. I think MTR tenants could be ok with this and it really depends on your business and how you plan to mitigate risk.

We collect rent through our property management system Hostfully. Again, this is a coming from the perspective of treating MTRs more like a STR rather than a LTR.

Hi Allen! I am in the exact same boat. STR owner and do a fair bit of MTR sprinkled in when I get inquiries. We also mirror the $500 refundable DD but are trying to figure out a cleaner way to handle it. Are you doing it via CC like your STR guests? If so, how do you secure the authorization on their card past 30 days?

[Nicole Heasley Beitenman]

We require a $500 security deposit and $150 cleaning fee. These have to be paid and a lease signed for us to hold the tenant's requested dates. We return the deposit within a few days of the tenant vacating because the place is usually spotless. 

[Kyle Moffat]

Quote from @Nicole Heasley Beitenman:

We require a $500 security deposit and $150 cleaning fee. These have to be paid and a lease signed for us to hold the tenant's requested dates. We return the deposit within a few days of the tenant vacating because the place is usually spotless. 

 Hi Nicole.  How are you collecting the security deposit?  Check?  Cash?

[Allen Duan]

Quote from @Kyle Moffat:

Quote from @Allen Duan:

I can share what we do. We come from a background managing short term rentals, rather than long term.

We do a smaller refundable damage deposit of $500. Mid term stays are much shorter than long term so there should be less opportunity for damage. Of course, good screening will also help prevent bookings that are likely to cause damage.

We've never done application fees, but we also don't do credit and background checks. I think MTR tenants could be ok with this and it really depends on your business and how you plan to mitigate risk.

We collect rent through our property management system Hostfully. Again, this is a coming from the perspective of treating MTRs more like a STR rather than a LTR.

Hi Allen! I am in the exact same boat. STR owner and do a fair bit of MTR sprinkled in when I get inquiries. We also mirror the $500 refundable DD but are trying to figure out a cleaner way to handle it. Are you doing it via CC like your STR guests? If so, how do you secure the authorization on their card past 30 days?

 We're actually charging them the deposit along with their rent and we refund it after check out. We're transitioning to a different model with Waivo now, where the guests pay a small fee for $1500 of coverage for damages. 

[Kyle Moffat]

@Allen Duan thanks!  I was just looking to get away from the small drag of the CC processing fee for the DD but overall that may be the easiest/least hassle way to do this.  Thanks!

[Erick Ayapana]

Quote from @Allen Duan:

Quote from @Kyle Moffat:

Quote from @Allen Duan:

I can share what we do. We come from a background managing short term rentals, rather than long term.

We do a smaller refundable damage deposit of $500. Mid term stays are much shorter than long term so there should be less opportunity for damage. Of course, good screening will also help prevent bookings that are likely to cause damage.

We've never done application fees, but we also don't do credit and background checks. I think MTR tenants could be ok with this and it really depends on your business and how you plan to mitigate risk.

We collect rent through our property management system Hostfully. Again, this is a coming from the perspective of treating MTRs more like a STR rather than a LTR.

Hi Allen! I am in the exact same boat. STR owner and do a fair bit of MTR sprinkled in when I get inquiries. We also mirror the $500 refundable DD but are trying to figure out a cleaner way to handle it. Are you doing it via CC like your STR guests? If so, how do you secure the authorization on their card past 30 days?

 We're actually charging them the deposit along with their rent and we refund it after check out. We're transitioning to a different model with Waivo now, where the guests pay a small fee for $1500 of coverage for damages. 

 @Allen Duan  what do you do if they decide to back out before moving in? Do you keep the security deposit? Or does that also need to be refunded (under California law)? 

[Allen Duan]

Quote from @Erick Ayapana:

Quote from @Allen Duan:

Quote from @Kyle Moffat:

Quote from @Allen Duan:

I can share what we do. We come from a background managing short term rentals, rather than long term.

We do a smaller refundable damage deposit of $500. Mid term stays are much shorter than long term so there should be less opportunity for damage. Of course, good screening will also help prevent bookings that are likely to cause damage.

We've never done application fees, but we also don't do credit and background checks. I think MTR tenants could be ok with this and it really depends on your business and how you plan to mitigate risk.

We collect rent through our property management system Hostfully. Again, this is a coming from the perspective of treating MTRs more like a STR rather than a LTR.

Hi Allen! I am in the exact same boat. STR owner and do a fair bit of MTR sprinkled in when I get inquiries. We also mirror the $500 refundable DD but are trying to figure out a cleaner way to handle it. Are you doing it via CC like your STR guests? If so, how do you secure the authorization on their card past 30 days?

 We're actually charging them the deposit along with their rent and we refund it after check out. We're transitioning to a different model with Waivo now, where the guests pay a small fee for $1500 of coverage for damages. 

 @Allen Duan  what do you do if they decide to back out before moving in? Do you keep the security deposit? Or does that also need to be refunded (under California law)? 

We require the first month rent upon booking. If they cancel 30 days before check in, they get a full refund. Partial refund for less than 30 days. That's a good question. If you don't collect first month rent upon booking, you definitely want to take a deposit of some sort for holding the dates for the tenant.

[Jamie Banks]

As the landlord we set the standard, I set my security deposit based on the risk level to me as the owner / manager. 

My deposit varies by size of the property but generally I’m charging 25-30% of the rental rate as the security deposit and I charge an additional refundable deposit for pets on top of an additional cleaning fee. 

There’s platforms out there that charge lower amounts for screenings but usually you have to sign up for a property management system like Innago or Rent Redi.

I recommend using Baselane for rent collection. I bank and collect rent payments through Baselane and it’s a great way to set the rental terms and then forget it since the system generates invoices monthly.