Every time I choose to add a Damage Protection Plan (opens in new tab)to one of my twelve rentals, I ask the same question. Who pays for it, and how do I ensure everyone is aware of what’s covered?
I have twelve units, so this process is not one I take lightly. While most of my tenant’s stays end on a high note with no damage at all, damage does happen. It’s inevitable. And the cost of that damage, if I’m not protected, can really harm my bottom line.
When I am going through a new lease, there are five ways I can offset the price of the Damage Protection Plan. Here, I’ll share each of those ways with you, and why I prefer some over others.
What a damage protection plan actually covers
Before we get too far into the details of how I cover the cost of the Damage Protection Plan, let’s review what the plan actually covers. A damage protection plan is for landlords and helps pay for damage beyond normal wear and tear, the kind that a security deposit alone doesn't always stretch to cover. Renters insurance protects the tenant's belongings and liability. (I require renters insurance (opens in new tab) for any tenant that has a pet, and strongly advise it to my tenants for any other stay). The Damage Protection Plan is coverage for myself, and the furnishings that I have put into the property.
5 ways to pay for a damage protection plan
Option 1: Slightly raise rent to bake in the cost
This is the first way I can cover the cost of the Damage Protection Plan. Since all of the plans are under $100/month, I can simply raise my base rent and purchase the coverage. That rent difference is very unlikely to effect my demand, particularly if I match it with a very low or no deposit. My tenant doesn’t even need to know. Many landlords ask, if working within this method, “Do I still collect a security deposit?” The short answer - it’s up to you. I like to still collect a small deposit. $150 works great for me. That covers a deductible of the damage protection plan as well as anything small that I may use to cover damage that isn’t worthy of a full claim.
In this case, I do let the tenant know that the property comes with a damage protection plan and the limits of that coverage. It’s a bonus I share with them. I’ll tell them, “This property comes with a Damage Protection Plan automatically. That helps to cover things that a normal security deposit would cover so you can stress less.”
Pros: Simple. One line item. No awkward conversation about a new fee.
Cons: Rent increases can make my property become not a fit for some tenants, and if a tenant is comparing your listing to others, a higher base rent can cost you a look before they ever hear about the protection it's paying for.
Option 2: Add a separate, transparent monthly fee
With this option, I keep rent at my normal rate and add the Damage Protection Plan into my Property Details as a monthly fee. When having initial conversations with a traveler (prior to screening and a lease), I confirm with them all fees and would share the details of the Damage Protection Plan.
Pros: Full transparency. Tenants see exactly what they're paying for and why. This tends to build trust, especially with tenants who've been burned by vague fees on other platforms.
Cons: More fees on my listing (I have a cleaning fee and pet fee on every listing), and some tenants may react to any added fee even when it's disclosed clearly and priced fairly.
Option 3: Cover the cost myself
Peace of mind is valuable. Very valuable. For this choice, I cover the cost of the plan myself without increasing any rent or fee. Often I will go this route if I have a harder-to-rent property, or a tenant that would like to stay for an extended time and would be a fantastic tenant, but I’d like the extra protection (perhaps they have multiple pets, etc). Especially for my higher-priced rentals, the cost of this coverage on a monthly basis is worth it, and then some. I have properties of all different sizes, ages, and finishes, and those of my high-end properties I want to take no risk in damage, even if it is unintentional from my tenants. Peace of mind is worth the cost.
Pros: Zero friction with tenants. No pricing conversation, no line item to explain.
Cons: It's a real number, and across multiple units it adds up fast. This only pencils out if you've built the margin for it into your overall numbers.
Option 4: Give a choice to your tenants
Monthly rental tenants are smart, and they are savvy. And for many of them (particularly the travel nurses, contractors, and corporate travelers that I have housed), it isn’t their first time renting. I’ll share with a choice: Deposit or Damage Protection Plan. The key here? I don’t make it complicated. Because it’s not.
”For this property, I like to give tenants the option of a refundable $500 security deposit, or a $55/month non-refundable fee that covers up to $2,500 of damage.” Often, they have some questions, so I send them to [this link]. This page explains the plan to tenants as it relates to them. If I instantly start talking about all the coverage it provides and all the details, I’ll overwhelm the traveler.
The Damage Protection Plan covers both of us far more than a regular deposit, but I want the tenant to understand what the monthly price is, what it goes towards, and how it works to help protect them as well. Most of the time, they choose the Damage Protection Plan.
Pros: Empowers the tenant to be a part of the decision and understand the protection
Cons: If you have multiple properties, you may have some that are using Damage Protection Plan while others are not.
Where I'm leaning in my own business
With multiple units, having multiple pricing philosophies running across different leases is very challenging to manage. Consistency is my best friend in my business. But, I still change my approach for different properties and tenants.
Option 4 is my ideal choice. I like having tenants in the know, and letting them be a part of the conversation. I get far less pushback on a monthly fee if they understand that it is highly beneficial for them.
For my higher end properties, I bake the cost into the base rent, as explained in Option 1. If needed, I’ll drop the cost back down and cover the cost myself. Keeping those properties absolutely top notch pays off in the end.
For “high-risk” tenants like those that may be traveling with a puppy, with a cat with nails, or a higher number of tenants in a property, I’ll require Damage Protection Plan, and present it as a line item monthly fee like I have explained as Option 2.
How to pick the right approach for your rentals
A few questions worth asking before you settle on one:
How many units are you managing? It’s easier to shift options if you’re managing one or two properties.
What does your local market (opens in new tab) tolerate? A market with tight rent comps may not absorb a rent increase as easily as a fee.
How price-sensitive are your tenants? Corporate travelers and travel nurses often care more about total move-in cost than they do about how it's itemized.
What’s your risk tolerance for damage? I like to sleep well at night. If that means I need to (and do) require Damage Protection Plan, then I do. I’m confident in my listing’s quality and the pricing I’ve put behind it, and if one traveler isn’t comfortable with the add-on cost, I know I’ll be able to secure another tenant.
There's no single right answer here. The right one is whichever approach you can explain the same way every time, to every tenant, without having to think twice.
If you haven't added a damage protection plan to your rentals yet, now's the time to look at it. Enroll in Damage Protection Plan through your Furnished Finder landlord dashboard (opens in new tab) and pick the payment approach that fits how you run your business.
Katie Lyon has spent over 10 years in the real estate and marketing industries. As a landlord herself, she loves talking to landlords all over the country and hearing their stories, experiences, and lessons.