Let’s Talk Deposits
Deposits for short-term rentals are often handled through the booking platform, while long-term renting has long-established industry norms. But when it comes to mid-term rentals, the landscape is less clear.
One red flag to watch out for in mid-term rentals is when a landlord asks for a full month's rent as a deposit upfront. This is often a sign of a scam so don’t be that landlord!
To avoid raising suspicions, it’s important to set a more reasonable deposit. Below are some tips to help you determine the right amount.
How Much Should You Charge for a Deposit?
From our experience, deposit amounts ranged from $0 to $1,500, with the average being a few hundred dollars. While zero-dollar deposits are rare, we don’t recommend setting your deposit that low. Renters understand that landlords want some security.
However, don’t assume you can charge a high deposit, like $1,500, unless your property warrants it. In our case, the $1,500 deposit applied to a high-end rental with brand new renovations in a high-demand, expensive area. Such a deposit is rare and often not necessary.
Finding the Right Deposit Range
As of September 2024, a reasonable deposit range is between $200 and $1,000, depending on the property size and rent.
For larger, luxury single-family homes (e.g., three bedrooms, multiple bathrooms, with high-end amenities like a sauna or hot tub), a deposit of $750 to $1,000 is reasonable.
For smaller homes, condos, or duplexes with moderate wear and tear, consider a lower deposit of $200 to $500.
In our experience, for two-bedroom properties with at least one bathroom and modern furnishings, we typically paid deposits between $400 and $750 (excluding cleaning fees and pet deposits).
Important: All of our deposits were refundable.
If we saw a "non-refundable" deposit, we assumed it was a mistake and clarified it with the landlord. If it wasn't an error, we chose not to proceed.
When Should You Collect the Deposit?
It’s important to clearly communicate when the deposit is due and include this information in the lease. Before demanding money upfront, consider the following common options:
100% of the deposit due upon signing the lease
100% of the deposit due with the first rent payment
Partial deposit upfront to secure the lease, with the remainder due with rent
Keep in mind that many of your tenants may be renting sight unseen. Asking for a high deposit upfront might make them uneasy, especially if they don’t know you, the property, or the area well.
Suggestion: For higher deposits, request a small portion (e.g., a couple of hundred dollars) upfront to secure the lease and hand over the keys, with the remainder due at move-in along with the rent.
Alternatively, you can request a money order for both the security deposit and rent upon move-in but this is a hassle as nomads may not have banks in the area. So at some point we all have to recognize that there is risk for both parties and find a path forward that works for both.
Our rule of thumb: For deposits under $500, we paid upfront when signing the lease. For deposits over $500, we either paid upon move-in or split the payment, with a portion upfront and the remainder due at move-in.
Other Types of Deposits
Cleaning Deposit
We encountered a cleaning deposit once, and we strongly recommend against it. Instead of a standard cleaning fee, one landlord required a refundable cleaning deposit. If we completed their checklist, we’d get the deposit back.
Unfortunately, we didn’t receive the checklist until just before moving out. It was so extensive that we spent a week cleaning and still lost half of the deposit. The checklist included areas that weren’t cleaned before our arrival—evidenced by construction debris left behind. We were also charged for minor issues, like a single freezer drawer and a bit of fur under a bed.
Tip: Don’t be this type of landlord. Charge a cleaning fee and hire a professional service.
Pet Deposits
Pet deposits offer extra protection for tenants with animals, typically cats or dogs that may cause damage to furniture or flooring. These deposits typically ranged from $100 to $250 and could be refundable or non-refundable.
My take: My dog is better behaved than some children, yet there are no “child deposits.” So, at the very least, make all pet deposits refundable.
Conclusion
Setting a reasonable deposit and communicating clear terms can help avoid misunderstandings and build trust with your tenants. Keep your deposit in proportion to the property’s value and condition, and always prioritize transparency to ensure a smooth rental experience.
