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Cottage Renting and Payment Options $$$

Published on September 6, 2012 by Sweet Marie

Cottage Renting and Payment Options

When you rent a cottage from a private owner, how do you pay?  It’s a valid question that even after all the years I have been doing this type of business, does not have a simply answer.  A few of my neighbours had approached me last summer when they decided to enter the cottage rental market with their own properties.  They asked me about the payment options and I gave them my suggested ideas.

*Best Practice*
Please keep in mind, this is one writer’s opinion, and also note that I am not a huge resort with several dwellings and multiple offers coming in at any one given time frame.  I am a single dwelling owner on an acre of land with an established website, home office environment and well maintained cottage rental.  Your situations may be different.  And as such, you may require the advice of a CGA or CA, (Certified General or Certified Accountant).  Either way, you should have a plan on how to answer this when the time presents itself.  After all, your cottage rental is not based on a free stay value proposition or bartering for time.

*Best Practice*
As a highly ethical business person, I always recommend that when you are building business relationships with families, couples and the average consumer, especially involving peoples’ vacations, you absolutely MUST put your costs to the client and their families/friends in WRITING.  You do not want to get into a war of words at the time of the booking and misrepresent your original price.  Having something in print, be it in your own handwriting, or from an email or on a document you’ve created and provided via the internet, you want to be accurate and true to your word.  People will try and negotiate, as that is often part of the practice.  But here we need a starting point to make the payment process smooth and simple.

 *Best Practice*
The damage deposit is one more payment “on hold” that needs to also be established with its secured option of temporary payment.  Again, this can be the same as any other method of payment listed in this article that you decide to utilise in your cottage rentals business.  But do NOT forget to secure one.  $500.00 to $1000.00 is usually the range.  And it too, should be stated in writing in both your proposal/quote and your user agreement.

Establishing a 25% or 50% deposit to secure the booking for a family, couple or group of friends is one way to retain a commitment on both sides without requiring the entire amount of the cottage rental fee.  Many families will often feel nervous about paying everything in advance, especially if the rental dates are more than 6 months’ away.  I normally allow for deposits if there is more than 90 days between the booking and arrival date.  I sometimes allow them less than that, because I am not in this to get rich, but more so for cost recovery and some profit too.  I like to try and help if possible.  It also inspires a sense of credibility with you and your “new” client.  With my regulars, I usually have some latitude because there is a trust that forms over the years.  Too little a deposit may not be enough to retain that commitment; so have a set percentage amount and ALWAYS state it on your quote/cost proposal in writing.  Remember to establish a timeline on when the remainder is expected, and put that in your quote as well.

Personal Cheques
I will allow personal cheques in only certain situations:

  1. For cottage rental guests that live far away from where I live, in another province, or more than 4 hours by car are examples.  I certainly don’t expect people to travel and spend more in gas to meet in person and sign everything.   The internet helps bridge the distance and so I’ll allow a cheque to come through the mail.
  2. There is enough time for the cheque to clear to avoid NSF charges.  That is also something that you will need to stipulate on your quote.  I’ve never had a cheque bounce on me once.  Two weeks should be enough time, but if you prefer to be safe, especially if the cheque is from another country i.e. the USA, to be safe, go into your bank in person, and put it through the teller and run a “check” on it.  It could take anywhere from 4-6 weeks.

PayPal Payment
I have some colleagues that use this method for everything they do online and swear by it.  They LOVE it.  Personally, anything that takes a piece or percentage of my hard earned income is not something that I prefer.  I declare all my earnings to Revenue Canada, so the last thing I wish is to have more of it serviced away in interest charges.  So if it works for you, it is a safe form of online payment processing that can be set up on any personal website.  It also helps make deposits easier to manage, and impulse renting faster.  I actually prefer having people think through the commitment longer, and not just placing debt on their credit cards because it’s easy to do so.  I try to think more like a parent and bill payer I suppose.  Call me a sap I guess!

Major Credit Cards
Again, same as PayPal, it’s simple and fluid, and for the most part secure.  I would caution those people who opt for this method of payment, people from overseas, or from potential guests in far away countries, I would do your homework first, and assess the risks in working with “International” cottage rental guests.  Please consult an accountant first for more advice.  And also note, the start up costs for this type of payment, are quite expensive for some cottage rental owners.  This may discourage you from putting it on your site.  Do your homework.

Always safe and secure and usually accurate, depending upon how good you are at counting it.  I usually count it twice in front of the guest and have them count it once.  My next stop is to the bank to put it in so I don’t spend it!

Money Order or Certified Cheque
Again, very much like cash, because if you lose it, you’re out the entire amount.  So be very careful with them and ensure that your business or name is spelled properly, it’s dated correctly, and all the information is accurate on the face value and information:  my usual preference.

Online Email Payments
I have to admit, I’m still a bit new at these, as I have only processed about half a dozen over the years.  As easy and simple as they are, there still exists a lot of fear from the payer’s end in processing an email transfer payment.  People in the end, really want to see you, see your paperwork, feel they are in the presence of someone who took the time to drive to wherever, or host you in their home and talk about the “great time”they will have enjoying their cottage rental.  The email payments are very secure, and they are also incredibly timely.  That’s my favorite part.  As long as you have access to the internet, you can secure a booking in minutes.  Ultimately, that is the objective here.  And if you can achieve this in under ten minutes hooray!  All you need is an email address, an online banking method through your own bank, and the payer’s password.  I will often tell them to use the name of my lake and the arrival date as a secure password.

What I do not recommend:

  • I.O.U or promissory note à not enough to secure a commitment if they back out you’re stuck
  • Bartering  à too complex and lots of liability; what if you don’t like what they did for repairs?  What if the boat they left behind never works? Too many variables.
  • Partial up front and the rest when they leave à BAD! BAD! BAD! Those are the renters that are going to find a way NOT to pay, whether it’s through complaints, mishaps, or disappearing like a “dine and dash” fraud in a restaurant.
  • Freebies to provide value à same as above; some people just look for ways to get out of paying you what you are rightfully entitled to expect, so do not give them a chance; do it right from the start
  • Last minute backing out àhave a cancellation fee and policy established and with a timeline, if they cannot go on the week provided because life steps in, yes be fair, but also have it in writing that you will keep a portion because now you probably won’t rent it and it will sit vacant; for me I retain 50% of the rental, and if I do rent it I then send a cheque back to the cancelled renters for some more, once I have secured what the new amount is, as it’s probably a lot lower.

Your word and your business practice is all you have in the end when it comes to cottage rentals.  It doesn’t matter how amazing your cottage rental property is, if you treat your rental guests and your potential guests in an unethical manner.  Have a good way in which you manage your payments so that you too are not defrauded out of time or damages.

One thought on “Cottage Renting and Payment Options $$$

  • Denis
    on September 7, 2012

    Thank you Sweet Marie for your interesting article. I agree with you that we need to put in writing everything concerning money, and more. That’s what I do and I never had trouble with any of my clients.

    I endorse your position on all the paiement methods, except for PayPal. As you say, you like it or you don’t. Almost 50% of my clients pay by PayPal. It’s the only method I use with my international clients. Of course, PayPay charges a fee. What I did to cope with this is that I integrate this charge into my rent ( 3% increase). That way, I recieve about the same income.


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