What it’s Really Like to Own a Vacation Home Rental Business – Messy Guests – Part 1

One of the more challenging parts of owning a vacation rental home is the guests themselves. None of us have a crystal ball, nor are we allowed to do detailed interviews and background checks on our guests, so in most cases, we’re left with a certain level of trust and blind luck, and the belief that most people genuinely want to take care of your home.

This isn’t always the case, though, and in this series we’ll be discussing what you can experience, how to prevent issues, how to legally screen guests, and how to recover and deal with the aftermath of bad guests. In this article, we’ll start with prevention.

An Ounce of Prevention

The best way to deal with bad guests is to avoid them all together and to take steps to ensure that when accidents happen, you’re covered. That may seem obvious, but many owners might think that this is an impossible task. While it’s impossible to prevent all bad guests completely, you can take steps to keep them at a minimum. Using these same strategies, we’ve been quite fortunate to only have had one set of bad guests, and a few marginal guests out of 100’s of guest stays.

Pricing:

We’ve discussed in previous articles that pricing can help you pre-select guests that are more likely to take good care of your home. Now, we have to be cautious and ethical here, I’m not suggestion that you try to eliminate and particular demographic, race, gender, or other distinct group of people. I’m saying that setting prices to more moderate levels, along with some policies we’ll discuss, you can attract guests that will leave the home as they found it.

For us, we find that being $10-20/night more than other similar homes helps us not only maximize profit, but also attracts guests that are less price senstive. These types of guests are typically looking for a home that will provide a higher level of care from the owners, and thus, a better more “home-like” experience. With that expectation, I have found that the level of care they expect is also the level of care they provide. These guests are the ones you want coming year after year. They will usually leave the house the same or better than they found it, they are highly communicative (which can help you continue to improve the home for other guests,) and they are likely to rebook for future stays.

Allowing Pets (Dogs):

This section will likely sound completely counterintuitive to you, and in some cases, you’d be right, but for the majority of guests, I firmly believe that accepting pets will help you attract guests that will take care of your home. I say “pets”, but in reality, I’m only recommending dogs. While there are some people that have issues with allergies around dogs, there are far more people that are allergic to cats. Cats also usually require litter boxes inside the house. For these reasons, we don’t allow cats in our vacation rental home.

Obviously, not all dog owners are conscientous, there are those that would just as soon let a dog poop on your front walkway as any where else, and are not very responsible as owners. However, by and large, most dog owners are aware of the potential issues that come with their dogs and not only look out for them, but take care of them if they arise. These may include accidents or marking in the house, chewed up household items, barking, etc. They are also aware that with dogs can come a little more “dirt,” and most of the time, they go out of their way to make sure that the house is very clean when they leave.

We’ll discuss a more in-depth pet policy later. The point here is that with proper planning, pet owners can be some of the best guests you can have.

Rental Agreements:

One of the most important documents for interaction between you and your guests is the rental agreement. This is a legal document that details your policies, pricing, methods for dealing with issues, and other important matters. In most cases, it’s a required document, and I would highly encourage you to use one. One of the best ways to create one is to find an example from a local rental management company and use that as a guide for your area. Each state and municipality has different laws, so I always encourage people to use a good example from a local source. Mine is found below that we use for our Orlando (Polk County) home.

Example Vacation Rental Agreement

We’ll go into more detail on creating and using rental agreements in later articles and of course through the Master Class, but for now, feel free to use mine as an example for your own. Most rental agreements should include basic information like check in and check out times, basic policies, safety warnings and disclaimers if you have a pool, what to do if there are issues in the house, etc. In the latter part of the document, it is common to discuss what legal recourse you have and will take if necessary including removing guests, additional charges for damage beyond any deposits, and other legally related items.

If you’re using a listing service like VRBO (and you should be), then having the guest agree to all of the terms of the rental agreement is required as part of the booking process. You get an IP address, date and time stamp, and confirmation they saw and agreed to it. This would be very important if anything should arise requiring legal action. If you’re not using one of these services, my advice is to obtained a signed copy of the document by email (signature page at least), or possibly by having the guest text you a picture of their signature on the signature page with “signed and agreed to rental agreement.” This will ensure you have some evidence that they saw and read the agreement, if you need it.


You should also include this in your home’s Welcome Book. If you need help creating one, check out our Welcome Book Template.


Over Communication:

One strategy that has worked well for us is to take an active approach to communication. So, when you send out your “thank you” or pre-checkin emails to your guests, make sure you highlight some of the issues they’ve already agreed to in the rental agreement. This is a perfect opportunity to remind them about their responsibilities. If you take the right approach, you can easily get buy-in from the guest as well.

An example email text (portion:)

“Thank you for your final payment, we have you all set to arrive on August 1, and we are looking forward to your arrival and your stay with us. Since this is your first time staying with us, our team has requested that I remind new guests of a few items:

1) Check in is 4pm, we need time to properly prepare the house for your arrival, and we want to make sure each guest has the same experience, so we need enough time to do so. If you need an earlier check in, let us know so that we can see if we’re able to accommodate you.

2) The cleaning fee allows us to have the house sanitized and as clean as possible, as well as doing laundry and remaking all of the beds. It does not cover basic cleaning, which is the responsibility of each of our guests. The basic rule of thumb is that you should do your best to leave the house as you found it, including trash pickup, dishes, etc. See the welcome book for more detailed information.

3) Please report any accidents or issues with the house as soon as possible so that we may document the incident for claim purposes.

Thank you!

Kevin Davis”

You’ll note that I’m taking a relatively soft approach. The welcome book goes into more detail about possible fees, their responsibilities for dishes, trash, vacuuming, etc. so they are well aware of the consequences. I try to keep things positive in the email with a  call back to what they already agreed to. I also shift responsibility from myself with “my team” as the asker. That allows them to look at it differently. If it’s the owner asking, they may feel less compelled to do what they are supposed to, but if it’s hurting a $10/hour housekeeper (or whatever they perceive), they may feel more compelled.

So far, the strategy has worked well for me.

Insurance and Deposits:

There are really three approaches to risk prevention when it comes to the guest damage side of vacation home rentals:

  • Per Stay Short Term Insurance Policies
  • Damage Deposits
  • Doing Nothing
  1. Per Stay Short Term Insurance Policies

This is actually the way I handle my risk at my vacation rental home. These are basically short term insurance policies that are purchased directly by the guest at the time of check out. I include them for every rental, no exceptions. They start at a cost $59, which provides $1500 worth of damage coverage. Additional coverage can be purchased. The insurance covers things like ripped sheets, stained towels, lost ping pong paddles, broken lamps, and more. Basically, to cover accidental damage to the property. So far, I average about 10% claim rate, all in the $10-20 range, and the provider pays within just a couple of weeks. It’s a very easy process, and I highly recommend it.

The only downside is you have no deposit to hold on to should you have any serious issues with a guest, but we’ll talk more about dealing with that in our next article. The benefit is not only the higher coverage (that you don’t have to pay for as an owner), but you also don’t have to deal with returning deposit money back to the guest, escrow accounts, or anything of that nature.

2.  Damage Deposits

This has been the go-to standard in both the long-term, and short-term rental industry. You basically take a financial deposit that is held in case something happens to the house. Any damage is then taken out of the original amount, and a partial or full refund is given at some point after check out.

While this can work, I have always seen them as risky for the short-term rental industry, especially given how much work is required. For example, let’s say you take a $200 deposit. What if a guest decides to stage dive onto your pool table, destroying it? Now, you have $200 to go towards a $1000 pool table, and you have to go after the guest for the rest. For most homes, there’s almost no way to collect enough of a deposit (most people won’t pay it) to make it a worthwhile endeavor. This is why the insurance option has been gaining popularity.

Having cash in hand does help with addressing items such as extra cleaning fees, which can’t be handled as easily with the insurance policy. We’ll go more into detail on dealing with those next time.

3.  Doing Nothing

If’ your’e a gambler, taking no precautions against guest damage might seem like a good idea to you. I would strongly advise against it. Either an insurance policy or damage deposit should be obtained for every guest!

As you can see, there are a lot of ways that you can protect yourself and vacation rental home from either accidental or negligent damage. Next time, we’ll look at ways that you can educate your on-site team, dealing with guests that leave messes, filing claims, documentation, billing for issues, and more.


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