Collecting An Airbnb Security Deposit Is A MUST
Updated: Jan 23
Why Should I Collect A Damage/Security Deposit From My Guests And How Much?
As a host you will definitely want to collect a security deposit from your Airbnb guests. Across your listings avenues, you will want to state that a deposit is required to start the booking process. This practice will not only help to ensure conversion but it also provides peace of mind that your guests will treat your property with respect. Nobody wants to lose $500.00. You can set a higher amount however, the higher the amount, the lower your conversion rate will be. $500.00 has always been a happy medium. The lower you go, the higher your chances are that your guests may not treat the property with respect as a lower amount becomes easier to part with. The amount that you collect is entirely up to you as a host. We have practiced $500.00 deposits and very rarely have we had issues with guests paying this amount. The deposit should never be included as part of the rental price.
The traditional method of travelling is to book a hotel room or stay at a resort. Vacation Rentals have become a lot more mainstream but travellers still have their reservations about booking a Vacation Rental Property. There is a scam in everything these days and sadly, the Vacation Rental Market is susceptible to that as well. Guests should be cautious of properties collecting full payment without asking for a deposit. We have encountered situations where we have had to house guests because they booked other vacation rentals in our city, arrive at the property to find that they have been scammed and have no place to stay. Guests should always check out reviews before booking any property. Due Diligence is a must for guests as well as hosts.
There are a few ways you can collect deposits. When we started out we used PayPal for a few years then switched over to Wave Accounting Software. Wave has worked out incredibly well for us as it is a full out Accounting Solution. As a Management Company, utilizing Wave was the perfect fit for us. If you intend to manage few properties then PayPal is a good option. If you have quite a few properties then we highly recommend using Wave.
Returning Deposits Due To Guest Cancellation
You will want to create policies that you adhere to as a host for deposits. Life happens and you will find that a guest cannot fulfill their commitment to booking your property for various reasons. 45 days before arrival is a reasonable time frame to allow your guests to cancel with a full refund of their deposit and the rental amount. You can tweak this to your preference but this is what we practiced and have had very few issues. So long as your listings and rental agreement state these policies then you’re pretty safe.
Sending Back A Deposit
Your Rental Agreement should contain a clause regarding deposits and how they are handled. Your listings should also be a reflection to your deposit clause. We return deposits pending no damages within 3-5 business days of departure. If you use PayPal or Wave then issuing back a deposit is a just a few clicks away to refund.
Retaining A Deposit Due To Damages
Mentioned above in this post indicates that a $500.00 deposit is a happy medium to ensure that guests treat your property with respect. That is not always going to be the case. Accidents can happen and damage can be done in your property. Sometimes the damages may exceed the amount of the deposit. Proper Rental Insurance is advised that is tailored to Short Term Rentals. In the event that the damage exceeds the deposit amount, you will have no choice but to make a claim or go out of pocket to cover the damages. Your guests out of good nature may also be kind enough to pay so effective communication and a healthy relationship with your guests can aid in this. There may also be cases where the damage is minimal and you can retain part of the deposit and refund the remainder. These types of refunds are easily performed through PayPal and Wave.
Making A Claim Through Airbnb
When you list your property with Airbnb, you are already covered for deposits. Airbnb will handle all damage claims. You don’t have to request for a deposit but you do have to make your claim within 48 hours of your guests departure otherwise Airbnb will not cover the costs. Evidence must also be provided to support your claim so make sure to take pictures and videos as Airbnb will not send anyone to assess the damages unless it is a hefty claim.