April 20th, 2022

PRM Protection Guide

Updated: August 10, 2022

One question we often get is "what happens if someone trashes my place?" While I'm happy to say this a very rare occurrence, we want to make sure you're properly protected in the event that something like this does happen. Having said that, I wanted to take a moment to cover our policies and the following topics:

Screening Renters
Different Types of Damage
Recovering Costs
Security Deposits & Rental Contracts
Door Codes & Cameras

There is a lot to unpack, so let's get into it!

1. Screening Renters

The best way to protect against recovering loss due to damage is to prevent damage from happening in the first place. That is why we put a strong focus on renting to the right kind of renters! The only way to ensure that we don't get bad renters is to not have renters at all, so it's not a perfect science, but the following are strategies that we employ to help ensure the incident rate is as close to zero as possible.

Age Restrictions – Sure, there are a lot of mature 21 year olds that are looking for a getaway, but the fact of the matter is they over-index for immaturity and why rent to a 21 year old when you can rent to a 41 year old? Because of this, we put age restrictions in place (typically 25 years old) in order to avoid said circumstances.
Reviews, Photo ID – In order to “instantly” book one of our homes, you have to have a positive review from a previous host as well as having your ID uploaded to the platform. This greatly reduces the chance of someone who is new to the platform (Airbnb, VRBO) and doesn’t know the proper protocol when staying in another person’s home.
“What brings you to the area?” – This is something we ask all guests to learn more about the details of their stay. This is a little more art than science, but sometimes you can get bad vibes from a potential guest if they are being curt, unresponsive, or don’t really have plans. There’s a big difference between “we plan on skiing with the family and hiking around Hawk Falls!” and “Looking to party!” We give this heavy weight when deciding who to host.
Automated Guest Vetting – Platforms like Airbnb/VRBO will automatically comb through public records to make sure there aren’t any red flags going into a reservation. Some guests are banned from the platforms and others will have their reservations cancelled by Airbnb/Vrbo before their stay based on some information that surfaced.

Once again, it's not possible to get it right 100% of the time (maybe the primary renter is responsible but they brought the wrong friend with them) so that's why we have protection in place in the event that something undesirable does happen. But first, let's understand the different types of damage, because it's not all the same.

2. Different Types of Damage

When you're renting your home, there are inevitably going to be some wear/tear and costs that come from running your home as a business: hot water heaters fail, septic tanks need to be drained, and items break. Sometimes it's the renter's fault, sometimes it's not, and sometimes the lines are really blurry. Let's use some examples...

(1) Not the Renter's Fault:

Hot water heater fails
Baseboard heater not working
Fridge isn't getting cold enough

(2) Is the Renter's Fault:

Hole in the wall
Home is excessively dirty (extra cleaning cost required)
Hot tub has a beer bottle in it

(3) Might be the Renter's Fault:

Chair broke
TV stopped working
Septic backed up into the house

3. Recovering Costs

Before we get into how we recover for damages, I want to explain "the game".

"The Game" and the $100 Rule

Unfortunately, it's not as simple as...

guest breaks coffee pot --> guest pays for coffee pot

Why not? Because what's more valuable than a $30 coffee pot is a 5-star review. There are over 5,000 rental properties to choose from in the Poconos, and the higher you show up in the search results, the more eye balls are on your property and the more money you are able to make. Receiving a 5-star reviews is the best way to ensure your home is ranking as high up as possible which carries a very high indirect monetary weight! Maybe they broke the coffee pot, maybe they didn't, maybe they don't know if they did or maybe it was one of the other guests, but what we do know is the last impression they will have about the stay is us reaching out to charge them even more money for something they perhaps accidentally did (keep in mind, they just paid hundreds if not $1,000+ for their stay!).

For this reason, we like to adopt the $100 Rule. If anything is less than $100 we like to treat it as forgivable. Cost of doing business. Mistakes happen, all other signs indicate that they had a great time, so let's make sure we're preserving the positive review!

Now, there are other instances that certainly merit recovering costs. Let's break those down:

(1) Not the Renter's Fault - Simply put, if it was something that is clearly and obviously not the renter's fault, we're certainly not shaking them down to recover the damages. Can you imagine if you're renting a home, the fridge stops working, and then the host asks you for $800 to replace it? You'd be furious! Some costs will be assumed by the homeowner as the cost of doing business.

(2) Is the Renter's Fault - In this case we know without a doubt that this was the guest's fault and in these instances we do hold the guests accountable. We approach these circumstances as follows...

Speak to the Guest – Chances are they are remorseful and want to pay for the damages. We usually approach it by saying, “...we know accidents happen and we would prefer not to escalate this through the proper channels and trust we can find an agreeable solution,” etc. We have our team take inventory of the damage, uncover what the replacement cost is, and pass those costs off to the guest. More often than not the guests agree to pay the fee/replacement costs and the owners are made whole. However, sometimes the renter digs their heels in, disagrees with the accusation, and declines to pay for the damages. In this case...
AirCover – Airbnb is 80% of our bookings, and they provide up to $1 million in coverage. So if the guest refuses to pay, we have the option of going through Airbnb to create a case and be made whole for damages. While Airbnb does not pay out on all cases, we have a strong understanding of what they're looking for to help recover as many of the funds as possible. Two things to note...

There is no property damage coverage for VRBO and Direct bookings.
AirCover does not protect against fines, so if a guest shoots off fireworks and the community fines the homeowner then we're unable to recover that from any platform.

(3) Might be the Renter's Fault - This is where it gets tricky. Let's use the example of a chair breaking. Did the guests do something they shouldn't have that resulted in the chair breaking or was the chair perhaps getting old, wear and tear, or even maybe something the previous guests did and the next guest simply sat in it and it broke? It's hard to say. Maybe it was something they did, maybe it wasn't, so how do we approach this?

You may have heard the saying "it's not what you know, it's what you can prove" and that certainly rings true here. If we take the approach of "shaking down" a renter for something they may have done wrong it will likely play out as such...

They won't agree to pay it and will actively be offended.
We will have to file an Airbnb claim (if it was even an Airbnb booking) and chances are we won't be able to substantially prove it was the renter's fault.
The renter is now committed to giving us a negative review and if you read up on our point of view on reviews , this is about as bad as it gets for us.

So there are some blindspots, and damages won't always be able to be recovered when:

Unclear Proof - We cannot adequately prove that the damage was the renter's fault.
VRBO/Direct - It was a VRBO or Direct booking and the renter refuses to pay.
Fine - It was a fine, not actual damage, which is not covered by Airbnb's AirCover program.

Then there is also your Homeowner's Policy. As a homeowner renting out your second home (or investment policy), you may be required to have coverage that extends to your guests as you rent your home. Many homeowner policies, including Traveler's and State Farm, offer a short-term rental rider that extends your homeowners coverage to the guests in your home (see below)*. However, with most-all homeowner policies, there is a deductible that needs to be met before the coverage kicks in (typically $1,000).

*Please consult with your insurance agent for details on your particular policy!

In other words, your Homeowner's Policy is important to have but is really only going to kick in and apply when:

There is a large property damage claim where the deductible will be met.
There is a personal injury claim that you may need coverage against (although you also have coverage through Airbnb and VRBO, so there is adequate protection there).

That is a lot of digest. There is some coverage in certain areas and little to none in others. Here is a little chart summarizing where you do and don't have coverage.

4. Security Deposits and Rental Contracts

Before we get into the details, I want to explain the concept of "barriers to entry". We want to make booking easy! The easier it is, the more bookings you will receive and the more money is coming your way. If we make renters jump through hoops, there will be some level of "fallout" and our understanding is that fallout is going to be greater than any security deposit or formal rental agreement will help to absolve. However, we can implement Security Deposits and Rental Agreements upon request, but it is against our recommendation to do so.

Security Deposits - As seen in the previous section, there is a lot of coverage, and a lot of strategies at our disposal to ensure renters are on their best behavior, incidents are rare, and if they do occur we can recover funds directly or through various coverages. For this reason, we do not recommend providing security deposits. We believe strongly that charging the guests a 2nd time will result in a few down-stream consequences...

Fallout - as mentioned before, some guests won't do it and will cancel. There's a negative connotation, unspecific to us, that we're just going to find reasons to rip off their security deposit, and they will just book with someone else who does not mandate that requirement
Permission to be Bad - "The money is already out of our account, screw it, who cares!" Additionally, there's no guarantee that the security deposit will cover the full breadth of the damages, so if they do $500 in damages and the security deposit is only $250 then we're still in the same boat.

However, we can implement these upon request.

Rental Agreements - this is another barrier-to-entry that we like to eliminate, as many guests might become sheepish about booking when they might not fully understand what they're signing for (especially after already agreeing to Airbnb/VRBO's T&C's). What we prefer to do is include any specific rules in the booking confirmation message (goes out right after booking) so they are informed and abreast of the relevant home and community rules. Some examples may include...

Home-Specific Rules: Anything the owner (or management) wants to make known to the guests that they have to abide by
Community-Specific Rules: Rules that the guests needs to be aware of prior to staying at a home in this community

Once again, we can provide a Rental Agreement upon request.

5. Door Codes & Cameras

To start, I want to address theft. While we cannot guarantee anything, I do feel inclined to mention that it is incredibly rare. First off, there really aren't "valuables" at the home. Sure, there are couches and TV's but they're quite cumbersome and someone isn't inclined to drive 2 hours on the off-chance that the home is unoccupied, the neighbors aren't around, there aren't cameras at the property to maybe be able to steal a couch.

Having said that, we should still lock up your home! And there are a few different ways to do that...

(1) Lockbox with a key inside (like this ) (2) Keypad with a code to access (like this )

If you decide to do a Keypad, you can either do so by having a static combination that does not change with each guests or, if you prefer, you can generate a new code for each guest. If you prefer to generate a new code for each guests, we will require your assistance to program the code (we are not able to generate the codes ourselves) but we will share with you the stay details and the last 4 digits of the primary renter's cell phone number so you can program the code for their stay.

In both cases, we do require a backup key. This way, if the lock fails or the key is lost we still have a way to access the home without needing to call a locksmith.

Regarding cameras, you are authorized to have exterior-facing cameras at your home to monitor the premises. If you have a hot tub, we do not recommend having it facing the hot tub. We will not be able to monitor the cameras on your behalf, but as homeowners ourselves we do recommend Blink ( here ) as an affordable camera, easy to set up, has long battery life and good motion detection technology.