Security Deposit for Midterm Rentals, Yes or No? If so how much and how to?

[Justin Garofano]

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.

[Bonnie Low]

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.