A thorough short-term rental agreement is the foundation of any lucrative vacation investment property. By making a comprehensive guest contract, you can be sure that your property is well-protected and that your guests have all the information they need for an enjoyable stay. From check-in/check-out policies and payment terms to how to operate amenities in the rental, your short-term rental agreement creates a win-win situation for you and your guests. Make sure you’re ready for anything! Here’s everything you need to include in your vacation rental agreement.
What Is a Short-Term Rental Agreement?
If you already have an investment property, you’re probably eager to start renting out the property to guests. Before you do, though, you need to ensure you’re protecting yourself and your property.
A short-term rental agreement is used when you’re renting out your property for any length of time up to 30 days. With Airbnb, VRBO, and many other top listing websites, you ask your guests to sign the short-term rental agreement before booking.
A vacation rental agreement commonly includes:
- Property details
- The rental period
- Occupancy limitations
- House rules & restrictions
- Payment details & fees
- Legal liability
- Violation of agreement
Is a Short-Term Rental Agreement Mandatory?
Short-term rental agreements are not universally mandated, although they may be required by the regulations of your chosen listing platform or local ordinances. However, it is considered a best practice for investors engaged in short-term rentals to have such agreements in place.
By establishing a mutual understanding of expectations and rules between hosts and guests, a short-term rental agreement ensures clarity and helps mitigate potential disputes. Whether it is a requirement or not, having a formal agreement in place is highly recommended for all parties involved in the short-term rental transaction.
Check-In & Check-Out
It is important to have clear check-in and check-out times and policies in place for short-term rental agreements, as well as an understanding of payment terms that will apply. When it comes to check-in and check-out times for short-term rental properties, there are a few important rules that investors should be aware of.
Arrival & Departure Times
A short-term rental agreement also needs to disclose the rental period. It needs to state the following:
- Arrival date
- Departure date
If you or your guests make any changes to the dates, you’ll want them to sign an updated agreement.
Late Check-Out Fees
If a guest decides not to leave on time or requests an extension beyond what was agreed upon, you may charge them a late check-out fee if desired. These fees vary depending on how much extra time has been requested but should also take into account any additional cleaning costs associated with accommodating such requests.
Early Check-In Fees
Similarly, if a guest arrives early before their scheduled check-in time, you may charge them an early check-in fee if desired. Again, this fee will depend on how much earlier than expected they arrive and whether or not it requires additional preparation from your side (such as expedited cleaning).
Understanding the payment terms of a short-term rental agreement is important to ensure you are protected as an investor and are following the best pricing strategies for vacation homes. Surprise fees could lead to negative reviews on Airbnb, which makes it harder to maintain a high booking volume in the future.
Security Deposit Requirements
Security deposits are a common requirement for short-term rental properties. It’s important to note that landlords must return this money within a certain time frame after the tenant has vacated— usually 30 days or less, depending on state law. Instead of holding the deposit for themselves, investors will allow their hosting site or property manager to hold the deposit and return the appropriate amount.
Cancellation policies should be clearly outlined and agreed upon prior to signing a lease agreement. These policies often include fees for canceling reservations early or late as well as penalties for no-shows. For example, if a guest cancels their reservation within 24 hours of check-in, they may be charged an additional fee or lose their entire deposit.
Payment methods accepted will depend on your target audience and what type of property you are renting out. Most vacation rentals accept major credit cards such as Visa, Mastercard, American Express, and Discover Card. Some may also accept PayPal payments and cashier’s checks or money orders from guests with good credit ratings. Additionally, many hosts offer discounts when paying with cash or other forms of payment like Venmo. This can help attract more customers to your property who may not have a credit card or bank account.
Occupancy Rules & Restrictions
Occupancy limitations will protect your profits in multiple ways. For starters, many local laws regarding short-term rentals stipulate maximum occupancy per bedroom. Additionally, forgoing this boundary may lead to parties or other over-occupancy events that can damage your property.
Number of Guests
A short-term rental agreement also needs to specify maximum occupancy limitations. You need to clearly state how many guests are allowed to stay at the property and define sleeping arrangements.
You can also ask for a list of names of everyone staying at the property, along with their phone number and address. This helps protect you in case your guests bring in unannounced guests and prevent excessive wear and tear from too many people occupying the property at once.
Depending on your local laws and regulations, you may need to set specific pet policies for your rental property. These policies could include:
- Requiring tenants to pay additional fees for having pets
- Setting limits on how many pets are allowed per unit
- Outlining any breed restrictions that apply
By establishing clear pet policies ahead of time, you can protect yourself from potential damages caused by tenant’s animals while still allowing them some flexibility when it comes to bringing pets of any kind during their stay.
Many cities have laws prohibiting smoking inside residential units, so it is important for investors to make sure they understand these regulations before renting out their properties. Even if they don’t, many investors prefer to restrict smoking in investment properties because of the long-term damage it can do and the increased fire risk.
If smoking is permitted within your rental units, then you should clearly outline where tenants are allowed to smoke as well as any associated fees related to cleaning up after smokers. Establishing clear rules around smoking can help reduce fire hazards while ensuring that all parties involved understand what is expected when it comes time for check-out inspections at the end of each tenancy period.
Property Maintenance & Damage Liability
Rental property maintenance and damage liability are important topics for residential real estate investors to consider— it doesn’t matter if you’re investing in short-term rentals, vacation properties, or Airbnb investments.
Your rental agreement may require guests to complete a few tasks from your vacation rental cleaning checklist to help expedite the process. This may include starting a load of laundry, removing trash, or ensuring all the doors/windows are locked. As an investor, it is important to establish clear expectations with your guests before they book so they know what will be expected of them before they check out.
However, it’s a bad idea to go overboard with cleaning requirements, as guests are already paying a cleaning fee. This is especially true when hosting short-term rentals on sites like Airbnb— tenants are likely to leave negative reviews for excessive additional charges.
Costs for Damages
Accidents can happen while renting out a property. Because of this, it’s important to have some sort of agreement in place with your tenants regarding repair or replacement costs should any damages occur during their stay.
You may want to include language in your rental agreement outlining who is responsible for repairs due to normal wear-and-tear versus those caused by negligence on behalf of tenants. Additionally, you may also require a security deposit which could cover potential damages caused by guests during their stay at your property.
Liability Insurance & Liability Information
Finally, consider putting in a section in the short-term rental agreement regarding what happens if either one of you violates the agreement. This will help you in case your guests break any of the terms and conditions of your short-term rental agreement.
Liability insurance coverage is another key component when considering investing in short-term rentals. This type of policy can help protect you against financial losses related to third-party injuries or accidents occurring on the premises. Depending on where you live, there may be specific regulations regarding minimum levels of liability insurance required. Hence, it’s important to research local laws before purchasing coverage for your investment property.
Create a Short-Term Rental Agreement That Works For You
Ultimately, short-term rental agreement terms are an important part of starting a vacation rental business. They help protect both the guest and the property owner by setting clear expectations for occupancy rules, payment terms, check-in/check-out times, and liability for damages or maintenance issues. Taking the time to create a comprehensive agreement with your guests can save you from potential headaches down the road. Make sure to include all relevant short term rental agreement terms in your contract so that everyone is on the same page.