Owners With so many new properties coming onto the vacation rental market, owners are bound to make some mistakes along the way. I did when I started out, and learnt to my cost that if you don’t do the homework and get the systems in place at the outset, more problems are created along the way.Mistake #1 Accepting the first booking that comes alongIt is so exciting to get your first booking, but if you don’t have some policies in place, you could find it doesn’t work out as well as you hoped. Common pitfalls are taking a weekend booking in the middle of high season without appreciating this has blocked the opportunity of a full week’s rental before and after, and accepting a group without fully establishing how many of them there are, including their day guests.Solution: Create your booking policies in advance; write them down and post them on your web site so every visitor knows what your policies are. Decide on your maximum occupancy (including children) and stick to it. Don’t worry…if you have to turn down your first booking, there will be more. Mistake #2 Agreeing to take a deposit then a cash-on-arrival balanceIt may seem like a good idea to take a deposit on booking, then meet your guests who will give you cash on their arrival. This isn’t necessarily a bad thing to do, but it does have the potential to go badly wrong. Your guests may conveniently forget to bring the cash, and if you are not assertive enough to stand your ground and refuse entry until it has been paid, you might find you are out of pocket. It can be a very stressful situation.Solution: Clearly state your payment terms on your web site or listing. It’s generally accepted that a deposit of up to 50% is payable on booking with the balance payable up to 60 days before the vacation commences. 30 – 45 days before is the norm. Mistake #3 Not taking a damage depositIt’s unlikely anything will go wrong and there will be any damage. However, accidents do happen and the damage deposit paid by the renter is your security that you will be compensated in the event of significant damage or a gross breach of the agreement. Let’s say you accept pets and your carpet is chewed. Without a damage deposit you may not be able to recover the costs of repair.Solution: There are a couple of ways to handle a damage deposit. Hold a cheque for the damage deposit amount but don’t cash it ( you need a good amount of trust that it will be honoured if something goes wrong); include the damage deposit amount in the final balance, or ask for a cheque post dated to a week before the vacation and cash it then. If you have taken the money prior to the vacation, make sure it is returned promptly after you have checked for damage at the end of their stay. Mistake #4 Not using a rental agreement or Terms and Conditions of RentalIf you don’t have a clear document that states each party’s responsibilities, you have no come-back if something goes wrong. There are many people who are renting for the first time, and without laying out what you expect them to do; the limits of your responsibilities as an owner, and the terms of the contract, they really have no clue what is expected of them. You then open yourself to the risk of counter claims if something should go wrong.Solution: Write a contract that lays out all the terms of the agreement, such as maximum occupancy numbers; the time and day of arrival and departure; your policy on day guests, pets and cleaning, and a liability waiver. Googling ‘vacation rental agreement’ should bring up some examples, or go to www.laymyhat.com and search for posts about the topic. Mistake #5 Neglecting to tell the insurance companyI wince every time I hear that an owner has elected not to tell their insurance company they are renting out their property. This is not a money saving option! If a catastrophic event occurs – the place is burnt down, or a guest is injured in some way on the property – not having appropriate insurance or third party liability cover could be even more catastrophic. A second home/cottage policy is unlikely to cover rentals as a standard clause so check thoroughly.Solution: Check with your own broker or insurance company first as they may add a simple rider to your existing policy, however you may find you have to take out an additional policy or even change providers to ensure adequate cover. Don’t leave this one until you have an accident on your property to find out that your insurance is void because you have entered into a paid transaction for a rental.