You want to secure your Airbnb property from damages, but is it necessary to charge a security deposit? Here’s all you need to know about an Airbnb security deposit to help you determine if it’s a smart option for your business.
What Is an Airbnb Security Deposit?
An Airbnb security deposit is a specified sum of money collected from visitors by the platform. This covers any harm to property that happened during their visit. If the property is not damaged in any manner, the security deposit is refunded.
A security deposit can be set up by Airbnb hosts to cover small losses. You can, for example, charge customers for deep cleaning if they break glassware while staying at your residence. You can deduct the price of the cleaning service from the amount if you have a security deposit. The guests pay for the damage, so you don’t have to spend money to fix it.
How Do Airbnb Security Deposits Work?
When clients make a reservation, the deposit is not immediately charged. Instead, for the visitor to be billed, the host must make claims on the deposit. If there is property damage, hosts have a maximum of 14 days from the customer’s check-out date to make claims on the security deposit.
The Airbnb security deposit isn’t collected right away after the host chooses to file a claim, either. Instead, the host has to contact Airbnb through the Resolution Center to give proof of the damage. Photographs and receipts for repair should be included in the record. The host also has the choice of individually negotiating the security deposit recovery with the guest or having Airbnb handle the claim.
Does Airbnb Require a Deposit?
As a host, you have the option of charging a security deposit. While requiring a security deposit protects your property, it may also prevent potential visitors from making a reservation.
Hosts should review their listings in light of the ongoing COVID-19 outbreak. Consider removing any barriers that may discourage guests from making a reservation. For example, removing a security deposit could help you increase your occupancy rate. On the other hand, if you don’t have a security deposit in place, you may have to cover the price of any property damage yourself.
How Much Should I Charge for an Airbnb Security Deposit?
Approximately 59% of Airbnb hosts currently request a security deposit. The host’s decision on whether or not to charge a security deposit is entirely their own. Airbnb doesn’t recommend a particular amount for a security deposit. So, you’ll have to figure up your own pricing.
According to what Airbnb hosts said on various sites, there does not appear to be a standard amount to charge for an Airbnb security deposit. However, it seems that the security deposit should not exceed around 20% of the overall cost of the reservation. For an Airbnb security deposit, hosts tend to charge anywhere from $100 to $500 for each booking.
Even though it is optional to charge a security deposit, it is vital to understand how it differs from Airbnb’s Host Guarantee.
Damage to the property or belongings caused by visitors or their pets is covered by the security deposit demanded by the host. In addition, the Host Guarantee gives up to $1,000,000 in protection coverage for “rare occurrences of damage.”
The Host Guarantee might cover situations like:
- Guest-caused damage to your residence
- Guests’ damage to your belongings
- A guest’s pet caused damage to property and valuables
The Host Guarantee does not cover any of the following:
- Stolen money or assets
- Damage caused by normal wear and tear
- Guest or third-party bodily harm (Host Protection Insurance can cover this)
The Host Guarantee protects all hosts. However, for increased security, some hosts will demand a refundable host-required security deposit in addition to the guarantee.
When it comes to Airbnb deposit rules, you should estimate your prospective earnings on Airbnb investment property if you want to boost your Airbnb business. Use the Mashvisor Airbnb calculator to do this, as it will make the whole Airbnb security deposit charging process a lot easier.
Our calculator is distinctive in that it estimates the earnings by using traditional and Airbnb analytics for properties across the United States housing market. As a result, you can use our tool as both a standard and an Airbnb profit calculator.
The Airbnb data and insights that you can obtain with our revenue calculator are:
- Airbnb Occupancy Rate
- Airbnb Rental Income
- Airbnb Rental Expenses
- Airbnb Cash Flow
- Airbnb Cap Rate
- Airbnb Cash on Cash Return
- Airbnb Rental Comps
- Financing Method
If you’re a real estate investor, Mashvisor’s Airbnb calculator can simplify your rental property evaluation by letting you quickly obtain accurate and reliable Airbnb data. You can check here to learn more about the tool.
Difference Between the Host Security Deposit and the Airbnb Security Deposit
The fact that there are numerous types of Airbnb security deposits may be complicated. Based on the features of the property and the period of the booking, either the host or Airbnb may require a security deposit. A security deposit will never be requested based on a guest’s ethnicity, gender identification, culture, or heritage.
The Airbnb-required security deposit and the host-required security deposit are the different kinds.
Airbnb-Required Security Deposit
Airbnb puts an authorization delay on a guest’s payment method as part of the security deposit requirement. It is two days before their reservation and covers the deposit amount.
Guests will not be charged for this amount, but they will not have access to it until the hold is lifted. If there is no damage to the residence, Airbnb will release the hold on the debit or credit card 14 days after departure or before a new guest checks in, whichever comes first.
Host-Required Security Deposit
Host-required security deposit occurs when the host requests a security deposit for a booking made on their rental property. If you’re a guest booking an Airbnb listing that requires a security deposit from the host, you’ll see the amount before you register. However, unlike the security deposit by Airbnb, this deposit does not put a hold on any charges.
Only if a host demands it, the guests will be charged for the deposit. The amount that hosts wish to recover may be less or more than the mentioned amount, depending on the type and level of damage.
How Do I Get My Airbnb Security Deposit?
As explained previously, host-required security deposits are distinct since there are no fees held in reserve. Therefore, if you want to claim your Airbnb security deposit, you have to complete the steps listed below, as specified by Airbnb:
- Within 14 days of the client’s departure date or before the check-in of a new visitor, you can submit a request to Airbnb’s Resolution Center. You’ll need to describe the harm, provide proof, and make a compensation request.
- Your guests have 72 hours to reply to your request. If the visitor chooses to pay the desired amount, Airbnb will arrange the payment and return it to you, which could take 5 to 7 days. However, your guests can potentially refuse your proposal or pay a different amount.
- You can involve Airbnb if your visitor refuses to pay what you asked or refuses to pay at all. According to the Host Guarantee Terms and Conditions, an Airbnb Support Representative will contact the guest to help resolve the issue. Airbnb will send the client a payment request if the request is approved according to the criteria.
Security Deposit Documentation
You have to provide documentation of the harm to your property as part of the request. You can use everything from photographs, recordings, receipts for repairs, bills, or written estimates. To decide if the deposit is required, Airbnb will review these documents and information from guests.
Airbnb Security Deposit Benefits
Let’s take a look at some of the benefits that you can get with a security deposit.
Secures Your Property
When you demand a security deposit, guests understand that they will be responsible for any damage to your property. The threat of being charged will motivate the majority of your visitors to treat your property with respect.
If you do not demand a security deposit, your guests could be careless and may not hesitate to harm your property. Many visitors will only preserve your property if they are held liable for any damages. The security deposit supports the host in building a sense of responsibility in the customers, ensuring the safety of your property.
Compensates for Losses
You have the right to ask for compensation if your guests create any damage to your property. When you demand a security deposit, the visitors are responsible for any breakage or damage caused by them. If you don’t charge a security deposit, you won’t be able to demand that guests pay for minor injuries they create.
You should charge a security deposit if you want the guests who are accountable for the disturbance to cover the repair fees and thorough cleaning costs. The way to cover expenses caused by minor damages during a client’s stay is to pay a security deposit. While Airbnb Host Guarantee secures you from significant losses, the security deposit by Airbnb safeguards your short term rental property against minor damage charges.
Provides a Sense of Safety
You will feel relieved after you were able to collect a security deposit from the visitor you welcomed into your property. However, it’s frightening to think that a stranger could do something to your valuable possession. Hence, the security deposit comes as a stress reliever that ensures the guest will reimburse all damages.
Disadvantages of a Security Deposit
Although a security deposit may be a practical approach for hosts to secure themselves and their property, it also appears to have certain drawbacks.
Guests Are Concerned About Hidden Fees
Some hosts are concerned that demanding a security deposit may discourage guests from renting their properties. Based on what some hosts are stating on the internet, this could be a problem. For example, one Airbnb host said that he got tons of questions from guests who were newcomers to Airbnb.
Booking Process Becomes More Complex
Because a security deposit is optional, including it in your listing may trigger further inquiries from potential visitors. As a result, you’ll need to spend more time clarifying how your security deposit policies work and what it means to your visitors. As a result, the booking procedure can appear more complex, discouraging travelers from making a reservation.
Complaints on Pending Charges
According to Airbnb’s official support page, guests are not billed for the security deposit until a host files a claim. However, some of the visitors disagree. Several clients have complained that Airbnb has issued pending charges for their security deposit payment option. This gives hosts a negative reputation since it appears that they provided incorrect information to their visitors.
Hosts May Still Have to Take Their Visitors to Court
The presence of a security deposit does not exclude legal action. For example, if neither Airbnb’s Host Guarantee nor the security deposit sum covers the cost of losses, some hosts may be forced to take clients to court.
Although putting a security deposit to your listing may seem like a good idea, you must consider all factors before deciding. Considering the benefits and drawbacks of an Airbnb security deposit might help you determine whether it’s ideal for your rental business.
Contact your insurance agent to determine the best strategy for ensuring that your property is adequately protected. That way, you may be confident that you’ve made the best option and that you’re adequately covered.
Conclusion
Each host has the option of charging an Airbnb security deposit. Evaluate your rental items, refund policy, and overall booking price before making a decision. This way, you will ensure that you make the optimal choice for your rental business, regardless of its size.
Don’t forget to give Mashvisor’s Airbnb calculator a try—click here to discover more about Mashvisor’s real estate investment tools!