A security deposit is an amount that guests pay in addition to the rental fee to cover potential damages or breaches of the rental agreement. The good news is that many vacation rental platforms, such as Lake, help hosts manage security deposits efficiently.
How are security deposits charged?
Typically, you can charge a security deposit in fixed or percentage-based ways.
Fixed Security Deposit
With a fixed security deposit, you charge a standard amount, usually from $250 to $500, depending on your property type and requirements. If you host luxury or larger properties, you might consider deposits ranging from $500 to $2,000.
Variable Security Deposit
Alternatively, some hosts prefer to charge a percentage-based deposit. In this case, the security deposit is calculated as a percentage of the total booking amount, typically 10% to 25%.
Handling cancellations and property damage protection
When guests cancel their booking, the Lake’s cancellation policy kicks in. You must refund all or part of the security deposit, depending on your chosen policy. To avoid potential disputes with guests, you must communicate your cancellation policy.
Optimizing Occupancy and Profitability
Handling security deposits efficiently also contributes to your rental business’s profitability. By setting a reasonable deposit amount and a fair cancellation policy, you can strike the perfect balance between protecting your property and maintaining a high occupancy rate.
Implementing security deposits, cancellations, property damage protection, and other fees can significantly impact your online vacation rental business. By leveraging the features and support provided by Lake, you can ensure a smooth experience for you and your guests.