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Is your “no pet’s” policy costing your more money than it is saving you?

There are many reasons why landlords choose to not allow pets on their properties. Some people are worried about the damage to the property. Others are worried about the reaction of the neighbors and other tenants. But the most common reason by far is that the landlord used to allow pets and got burned by a tenant that allowed their pet to damage the property.

This is unfortunate because, if properly handled, renting to pets can be a highly profitable tool for a landlord. The key is to minimize and offset risk by doing through background checks of the pets and their humans, by collecting sufficient deposits to offset the risk, and by collecting additional revenue through pet rents and pet fees.

Why bother in the first place? Isn’t it much simpler to just say no pets and not worry about it? Not necessarily. Often having a no pet’s policy is much more complicated and problematic than allowing pets under controlled circumstances.

How a “no pet’s” policy creates more hassles

The first problem with not allowing pets is that it limits your marketing ability. 50% of renters in the United States have a pet. This includes tall tenants, short tenants, rich tenants, poor tenants, and every other sort of tenant. By putting “no pets” in your ad, more than half of the people who are looking for a place to look won’t even consider your place. This means that it will take more than twice as long to rent the place, and it means you will have fewer quality applicants. Instead of saying no pets allowed in your ad, you could put “pet’s negotiable” and then when they come in to the place you can see what kind of offer they are willing to make. And who knows, maybe they will love the place so much that they will decided that the cat can live with grandma for a few years up on the farm while they enjoy your property.

The second problem with a no pet’s policy is that it creates an incentive for a tenant to get around the policy one way or another. Landlords who don’t allow pets are much more likely to have a tenant who hides an unauthorized pet in the house. They are also much more likely to get a falsified request for an assistance animal. And if they are forced under fair housing law to accept an animal they are going to have to come up with animal rules in the lease anyway – and will have to face the potential damage, the problematic issues of dealing with other tenants, and all of the other negatives associated with allowing pets WITHOUT any of the benefits (like additional security and income) that you can get out of pets but not assistance animals.

Evaluating Risk

Don’t be so focused on minimizing your potential losses that you forget to maximize your bottom line profits. If a dog does $500 worth of damage, but you got $1,000 in extra security deposit and $2,500 in extra rent and fees, did you come out ahead? Of course you did – you made $2,000 and still have $500 in additional security.

The key is to evaluate the potential risk and ensure that you are receiving proper security and compensation for that risk. If a tenant came to a landlord and offered a $1 million deposit to allow them to keep a goldfish, who wouldn’t accept that? The security so far outweighs the potential damage that it would be a no brainer. The difficulty comes in adjusting your need for security to the tenant’s ability to pay. That means evaluating your potential costs, setting a minimum requirement for a deposit on top of that and then potentially asking for more as an opening to negotiations.

It is also important to evaluate risk by doing a background check on the animal and its owners. If the owners have poor credit or a poor rental history, then it might be safe to say that such irresponsibility might also indicate they won’t be responsible pet owners that will keep their pet from damaging the property. It’s also a good idea to do some checking up on the animal itself. Get references from previous landlords, require copies of veterinary records and city licensing, and feel free to exclude animals that might not have such a history (or charge an even higher deposit). Also make sure that it is clear to the tenants that you are approving this specific animal, not giving them a license to bring in any animal they want. And remember, you still have the right to restrict or require more security for pets based on breed, size, age, species, or any other factor that you wish.

The principle ways of offsetting risk are by 1) charging an additional deposit, 2) charging a negotiated amount of “pet rent” on top of the regular rent, and 3) by charging a non-refundable pet fee to allow the animal. In addition to this, you should do regular inspections on all of your properties and make sure that the animal’s behavior is not causing damage to the property or problems with the neighbors. By properly using these three tools you are able to not only ensure that the tenant can pay for almost any potential damage, but you can also make a tidy profit in the process.

If you have questions about how to rent to pets, email us at admin@tieronere.com or give us a call at 801-486-6200.

Licensed with the Utah Division of Real Estate