Are you always so flush with rental prospects that you can exclude half?
Residential rental housing is a business. What business owner, entrepreneur or investor would seek to reject 50% of potential customers … sight unseen? However, that is often the case with landlords when it comes to deciding whether the rental unit is to be pet-friendly or “no pet-owners need apply”. Pet-owners won’t so much as visit your property if you paint a no-pet image.
In this article, we’ll make the case for the pet-friendly option as the preferred alternative. That position is not one to accept lightly. It must be based on a sound foundation of terms, conditions and pricing. Read on and together we’ll assess the risks and maximize the rewards.
Risk/Reward
As a rental property owner, you weigh one against the other every time you sign on a tenant and rent a unit. To mitigate the risk and maximize your reward, you assess prospective tenants based on background checks, references and employment.
As we evaluate the options of pets/no-pets, a key revenue frame-of-reference must be recognized. About 50% of renters own a pet. That means your prospective renter pool will be halved if you choose to reject pet ownership by tenants.
So, consider the advantage of choosing to be more selective in screening prospective pet-owner tenants, and accept those that qualify plus are willing to pay a premium for any extra costs you may suffer as the landlord (with a profit spiff built in).
Market Differentiation
Universally, landlords agree that the unique selling proposition for a rental property is not that yours is “better” … because no rental unit is better in every respect, all the time. How the property is distinctive and exceptional and specific to their needs are the criteria prospective tenants consider when making a renting decision.
So, a pet-friendly marketing plan is a powerful way to drive enhanced demand by responsible pet-owners.
Pet-owners have 3 characteristics that are to your advantage:
- Difficulty to secure desirable rental housing.
- Likelihood to stay longer given difficulty to find pet-friendly alternatives.
- More receptive to a security deposit increase and/or higher rent.
Make your property stand out from your competitors. Target pet-owners in promotion of your rental. Showcase it as an exceptional property feature. Is your property near a dog park or an attractive area to walk dogs … flaunt it!
Risk Assessment
Your non-pet owner risks as a landlord are apparent – non-payment of rent and property damage, just to name two of the more common and most expensive. That said, let’s take a look at additional risks a landlord inherits when adopting a pet friendly rental posture. We’ll follow that with risk mitigation and rental property owner profit opportunities presented by those risks.
Pet-induced Property Damage: The most common are:
- Carpet replacement costs due to staining and excessive wear and tear.
- Chewed vinyl flooring, gnawed corners of cabinets, clawed window screens, scratched hardwood floors.
- Pest infestations of fleas and/or ticks.
The Humane Society cites, “Research shows that most pets do not cause any more damage to rental units than the average renter.” Certainly, consider the source, but it does ring true when controls and penalties are in place to motivate responsible pet owner tenant behavior.
Pet-induced Tenant Complaints: Barking dogs, screeching cats and squawking birds may pose a threat to the tranquility of your other tenants or neighbors. Additionally, tenants with allergies aggravated by certain animals and the potential for pet odors are on the list as well.
Pet-induced Injuries: Dog bites immediately come to mind. Also, bites or scratches by cats or the potential for being startled by unanticipated contact with more exotic pets such as reptiles may result in injury.
Risk Mitigation
Pet Agreement: Once you have decided to offer pet-friendly rentals, reduce your risks with a “pet agreement” as part of the lease. As an integral part of the signed agreement, all renters will be required to accept notice that their continued residence as tenants is dependent on honoring all terms of the lease – including provisions of the pet agreement.
Since all tenants are required to accept the pet agreement, renters that are current non-pet owners will already know the rules and what is expected if a pet is acquired. Non-compliance will be considered breach of contract with attendant consequences. KRS Holdings includes a provision in its leases that if a pet is kept on the premises and not so disclosed, the tenant will incur a $500 penalty.
Your primary focus is to shift as much responsibility to the tenant as possible.
Pet Agreement Provisions: Certainly, consult legal counsel to craft acceptable language. Click here to view the KRS Holdings Pet Addendum.
Note: KRS charges $199 per pet, non-refundable fee; plus $19 per month per pet.
In-person Assessment: Require your approval for any pet a tenant wishes to keep on the rental premises. Ideally, personally visit the pet to ascertain how the animal interacts with the tenant as well as yourself. At the very least, ask questions such as:
- Type of pet (if dog: breed, size, weight)
- Age of the pet
- Any history of biting/attacking humans or animals
- Past damage to property
- Care for the pet in the tenant’s absence.
- Proof of current licenses and inoculations.
Disabled Persons and Service Animals
Animals needed to accommodate a disability or for the individual’s well-being are not considered pets. Click here for a summary of Virginia fair housing laws that address this issue.
Summary
Why lose a significantly large (50%!) pool of potential tenants? Contract and price for protection and profit. Deal with pet ownership proactively by contractually limiting risk factors and maximizing revenue and profits by pricing your rental property appropriately for the extra risk engendered by pets.
At the end of the day, how much added financial risk do you assume with a well-designed and implemented pet policy … especially when compared to your more expensive exposures to dead-beat or destructive non-pet owner tenants?