When you decide to put your vacation home on the rental market, you probably know what you would like to get for it.Enough to meet your mortgage payments and expenses, perhaps even show a profit. But it's better to have more tenants at a lower rate than to hold out for top dollar and go unrented.
You should check around first and find out what a realistic rate is. Ask neighbors who rent how much they get. Check the newspapers. Local rental agents can also tell you what comparable units are renting for.
Once you have the basic rate set, there are still several ways this can be paid.
Most weekly summer rentals ask for a deposit of one-third in advance, with the remainder due on arrival. And, unless you use a rental agent, be sure the terms and amounts are set out in a letter to the tenant. Spell out clearly that the deposit is refundable (less expenses of re-renting) only if you are able to find a substitute tenant for the same amount.
With summer seasonal rentals it is usual to expect the first one-third of the entire amount as a deposit, payable in advance. A second third is then due June first, and the final third on July first. If the tenant leaves before the summer is over, and you can find another rental for the remainder of the season, you may -- but are not required to -- return a pro-rated portion of the rental.
For year-round rentals you may want to consider a variable monthly rent, higher in the summer and lower in the winter. This is an especially good idea for rentals which begin in the spring. These tenants might leave at the end of the summer after paying the uniform monthly rate during the summer. They would have had a cheap summer rental -- and you would have lost the opportunity for the premium summer seasonal rate.
Variable monthly rates are not as important for protection with year round rentals that begin in the fall. But they can be a help to tenants who have jobs which pay less in the winter.
To collect these rents, it is useful to set up a special rental checking account at a local bank. Rents can be put in as received, and the mortgage check can be drawn on this account. To cover unexpected shortfalls from emergency repairs, late payments, or projected monthly losses, there should be a buffer amount kept in the account. If this becomes depleted, it should be replaced.
Rents can be paid directly into this account, either by the tenant or the rental agent. This makes the money immediately available. And a tenant cannot claim "the check is in the mail" when a payment is late.
There will also be a concise record for income tax time. good idea to require security deposits if the rental is for more than a week or two. This can vary from $100 to the equivalent of two months rent depending on the length of the rental. The larger the security deposit, the better protection to cover damage or broken leases.
Security deposits in Maryland and Virginia must be put into special escrow accounts. In Maryland, but not Virginia, you must pay a minimum of 3 per cent interest.
And the security deposit must be returned within 45 days after the unit is vacated.