I used to be a strict pet-free landlord. I followed the same logic any investor might when deciding if my renters would be allowed to keep pets: Pets cause damage. They increased wear and tear, which could negatively affect my bottom line. Therefore, I simply would not allow pets at my properties.
But after 15 years of real estate investing, I’ve had a change of heart. And no, it’s not from those puppy dog eyes (pet or human!), but because I have come to see pets as a potential income source for my properties.
In this article I will break down the income-producing incentives that tipped the scale toward making my rentals pet-friendly properties.
Reduced Vacancy Time
Time is money in rental management, and the longer my property sits vacant, the less money it makes. The majority of rental properties are advertised as “no pets,” according to rental search data from Zillow. This correlates with rental search data from my own software’s database, which found that 27 percent of rental properties in the U.S. advertise “Pets OK,” compared with 73 percent U.S. rental properties advertised as “No Pets,”—based on a sample size of 61,790 units*.
The easiest statistic to find regarding pet ownership among renters comes from a 2014 survey published by Apartments.com. It claims that 72 percent of renters own pets. More recently, Zillow released its 2017 Consumer Housing Trends Report stating that only 32 percent of renters have pets.
This research indicates that there is a shortage of pet-friendly properties compared to the number of renters seeking pet-friendly housing. By allowing pets at your rental, you open your tenant pool and increase the desirability of your rental. This leads to shorter vacancy times between tenants.
Spend Less Time Seeking Funds to Repair Damage
If your state allows it, you have the option to charge an additional pet deposit on top of a standard security deposit from your pet-owning renters. Pet deposits can be used for cleaning a property or repairing damage caused by a pet.
Pet deposits offer additional security and allow you to have available funds to cover the cost of pet damage or excessive cleaning. If you only collect a standard security deposit and a pet causes more damage than the deposit will cover, you have to invoice the tenant to cover the cost of cleaning (or repairs) beyond the security deposit. You will then be actively seeking payment from a renter who has moved, and they—or the money—might be hard to track down. If this bill goes unpaid, you can either move forward with collections or sue the tenant as your state laws allow. Or, you could eat the cost to avoid prolonging the issue.
Regardless, you will either have to spend time or funds dealing with chasing down additional payment for pet-caused damage. Having an additional security deposit limits the possibility of requiring additional money from your tenant.
Another option for pet-friendly properties comes in the form of a monthly pet rent. Pet rent is collected along with your tenant’s standard monthly rent and can run anywhere from $10-$50 a month per pet. Over the course of a year, this pet rent can add an additional $120-$600 to your rental income.
In areas where vacancy rates are low and availability of pet-friendly rentals is even lower, most tenants expect to pay extra to live with their furry roommates.
Increased Renewal Rates
In general, your pet-owning tenants are more likely to become long-term renters, due to the fact that pet-friendly rentals are more difficult to find. When you build routine rent increases into your lease agreements, these long-term, pet-owning renters are the cream of the crop for an investor.
For every renewal, I also find it important to perform regular inspections. This helps determine any pet damage or problem areas that should be addressed before they become more expensive down the line.
The Legality of Pet-Friendly Properties
Make sure to check your state and local laws about increasing deposits and the legality of non-refundable fees. Your lease should have clear language about the types of pets acceptable at the property and what additional rent, fees, or deposits are associated with a pet-friendly rental (just remember to get it checked out by a trusted attorney before anyone signs on the dotted line). I also find it valuable to require renter’s insurance for all tenants, especially for your pet-owning renters.
A Special Note About Service Animals, Emotional-Support Animals, and Therapy Animals
Your tenants that have service animals or emotional-support animals (ESA) are protected by the American Disabilities Act (ADA). As a housing provider you’re required to make reasonable accommodation for these renters and their animals.
Renters with a service animal or an emotional-support animal are exempt from paying an additional pet deposit, pet fee, or monthly pet rent. They will, however, need to provide proper documentation regarding the need for such an animal, as required by the ADA and Fair Housing Laws.