Rental Property Investor · Lowell, MA · Member since 2018 · 3 posts · 1 vote
I have started my first Medium-Term rental in Massachusetts and am trying to figure out how to handle a security deposit. First of all, should I charge a security deposit? And if so, how much should I charge if the monthly rent is $3000 a month? It is a 30 day minimum stay, furnished, pets welcome, utilities included, washer/Dryer/smart TV/internet/utilities/stocked kitchen with dishwasher/private patio/ off street parking all included. Any input, ideas or advice is welcome.
Yes, I would absolutely charge a security deposit. Who are you marketing your place to? What kind of place is it? The threshold for what you can charge varies from guest type and from market to market. For example, if you're marketing to travel medical professionals you might look on Furnished Finder to see if there are any trends in your market for your property type (size, location, amenities, beds/bath). In my market deposits vary widely (we're not in an expensive market). Some people demand the equivalent of one month's rent. Most ask for something in the $500-$1000 range. I use a combination of refundable and non-refundable deposits. For my 1/1 (rents for $1400/mo) I charge $250 non-refundable, $500 refundable, and $250/pet refundable. The $250 non-refundable covers my cleaning and turnover cost. The $500 refundable is the damage deposit and my lease agreement also states I can keep it if they cancel their contract early. The pet deposit is self-explanatory. All in all, someone traveling with 1 dog, which is very common, is coming out of pocket $1000 to secure my unit and then paying the first month's rent of $1400. Almost all of my guests are traveling healthcare workers so they don't have huge budgets. These numbers work for me and are at the mid-range for my market. You'll probably need to experiment a bit, but you definitely want to have something in your bank account should damage occur.
Yes, I would absolutely charge a security deposit. Who are you marketing your place to? What kind of place is it? The threshold for what you can charge varies from guest type and from market to market. For example, if you're marketing to travel medical professionals you might look on Furnished Finder to see if there are any trends in your market for your property type (size, location, amenities, beds/bath). In my market deposits vary widely (we're not in an expensive market). Some people demand the equivalent of one month's rent. Most ask for something in the $500-$1000 range. I use a combination of refundable and non-refundable deposits. For my 1/1 (rents for $1400/mo) I charge $250 non-refundable, $500 refundable, and $250/pet refundable. The $250 non-refundable covers my cleaning and turnover cost. The $500 refundable is the damage deposit and my lease agreement also states I can keep it if they cancel their contract early. The pet deposit is self-explanatory. All in all, someone traveling with 1 dog, which is very common, is coming out of pocket $1000 to secure my unit and then paying the first month's rent of $1400. Almost all of my guests are traveling healthcare workers so they don't have huge budgets. These numbers work for me and are at the mid-range for my market. You'll probably need to experiment a bit, but you definitely want to have something in your bank account should damage occur.
Definitely yes. Especially if your aren't using a platform like Airbnb that provides some protection. We do $500 or $1000 based on the size of the property. There's always little things like stained linens or broken dishware you'll need it for.
@Justin Garofano Boston area yes. Look at what Furnished finder has for competition and set your deposit accordingly. Some people charge a pet fee also. Some use half months rent as a deposit. I am renting a room so deposit is lower but if you have a full unit people expect a decent deposit and if that is an issue they might not be the tenant for you. Now if you are listing on Airbnb it might be different. I will say deposit return should be quicker for this type of tenant.
I price my security deposits by looking at comps to understand the market. For your rental price I expect security deposits to range from $500 to $1,500. I always price my pet deposit separately and make it nonrefundable because my cleaners have to do a deep clean after each pet in case of allergies.