Landlord Hack 3 of 10 Pet Rent and Pet Fees
I got an email from a tenant late Christmas Eve. We are getting a cat let us know what we need to do.
While I must admit there is a bit of fear and trepidation there was also a smile.
The smile comes from the following.
I will collect $150 in pet registration fee and an addition $25 per month in pet rent for the remainder of the lease. It's written right in my lease. It was in my original ad as well. This fee is per pet as well.
I used to do increased pet deposit and found it to be largely unprofitable for me. The amount I collected in additional security deposit (SD) was largely ineffective. Most pets did little to no damage so the tenants regular SD covered any issues. On the rare occasion there was significant damage the added SD was only a drop in the bucket. The best I could say was my pet policy made my units appeal to a larger cross-section of potential applicants (included pet owners) so the transfer to my bottom line was maybe lower vacancy rate.
Personally I would rather tenant's not have pets but for me the segment of the market that is pet free is too small for my liking. I figure around 40% of renters own pets and another 20% want to get a pet. That reduces my pool of applicants to about 40% of everyone who would normally be interested in my units. I'm not willing to experience the 60% increase in vacancies or the decrease in asking rent to operate in that segment. As I said, I used to just collect additional security deposit but now I do pet registration fee and pet rent.
Since I have converted to pet registration fees and pet rent I have seen a significant increase in my bottom line (+3% last year for just pets) and no additional losses. If you think my fees are steep, call your local big box apartment complex and see what their pet fees are. Mine are about half of the big boys. I'm considering increasing them in the coming year. Post below with your pet fees and those of your market if you know them.
One thing to keep in mind, you can not collect these fees for a service animal and the jury has not weighed in (at least in my area) on comfort animals or companion animals. These are a whole different situation.
Finally do not call this a non-refundable pet deposit. Deposit and non-refundable are nearly mutually exclusive terms. Deposit is legally, tenant funds held by the landlord to be refunded subject to property condition. How can they be non-refundable if they are being "held by the landlord." Change your lingo. It's a pet fee and pet rent.
Happy Land Lording.
Again be sure to leave your pet fees below so we can get a sense of the market. Thank you.
Comments (6)
@Anna Watkins I like your thinking. I do like the pet rent being separate from regular rent because it allows me to advertise a lower initial price (more applicants). It also provides some appeal to those without pets so rather than having higher rents and all tenants with pets I have a mix, some have pets and some don't. In addition, pet rent discourages those with large numbers of animals. It's a pretty stiff jump in rent if they have the 3 total that I allow. I don't mention that I have a limit on the number of pets until the phone screening. I don't want people knowing that they need to lie about the number of pets they have. I've found that those who care about their animals expect the animals to cost them some money and don't resist the pet rent.
Bill S., over 9 years ago
I rent SFRs with yard space, and I feel that kind of rental is what pet owners are looking for, so I have always allowed pets. 'Til now I have charged a deposit, but now am considering higher rent and no deposit (or smaller) for the next time around. Anybody know Georgia law on this?
My most recent tenant came to me because of an outlandish pet fee charged by previous landlord. A pet wasn't included in lease, so when she brought small dog in and it was found, they wanted to charge $1,500 but she still couldn't keep the dog! She sent the dog back to dad, but brought it back 8 months later for 3 days before moving to my house, and was charged the fee again! Clearly she broke the lease terms, but I don't think there's any way the landlord could defend that amount in court. Holy cow! Comments?
Anna Watkins, over 9 years ago
@Shaun Reilly thanks for the perspective and I completely agree that you must know your local requirements before implementing new policies.
I did a little research and it is clear that a pet registration fee is not allowed if the money collected up front is more than 1 month rent in MA. You can do a pet fee if your rent is $1,000 per month and your SD is $500 then you could collect up to $500 in other fees (pet registration being one of them). The way I read it, if your SD is $1,000 on that $1,000 monthly rent then ANY extra fees except the actual cost of rekeying the locks is not allowed in MA.
Pet rent seems to be a bit less cut and dried so you might want to discuss that with your legal council. It does appear that if pet rent is to cover added wear and tear (like adding an additional person to the lease) then it might be acceptable. It is clear that if pet rent is to cover the Potential Damages due to the pet being there then it's not allowed. Pet rent sounds like it is more of a grey area so that is probably why you are seeing some landlords doing it.
Bill S., over 9 years ago
Great well written article.
However with all things real estate make sure you check your local laws and regulations before taking this (wonderful) advice.
In many places some combination of Pet Deposits, Pet Fees and Pet Rent will be illegal to charge. Here in MA you can't do any of those.
When people around here knowingly or unknowingly break the law I usually see $25-50. :)
Shaun Reilly, over 9 years ago
@Roy N. thanks for your comments. I have a couple of things in place that I think helps to significantly reduce the risk from accepting pets. 1) Limit the number of pets and never more that 2 of any one type. Once you get more than 2 you have a pack which I think moves beyond the companionship purpose pets of tend to mean the owner(s) lack the boundaries or judgement or have some other "flaw" that would mean they are not good tenants. Think the infamous cat ladies.
I also heavily screen for good pet ownership. I get 3 references and check them I also talk with the previous landlords about the pet(s) as well.
While nothing is fail safe, I like to think my approach is about as good as a no pet policy. After all, even with a no pet policy someone can sneak in a pet and cause the same damage. In addition, in some locations it is very hard to evict for a no pet violation of the lease.
Most of my properties have small yards or outside access so they are desirable for pet owners. I'm not sure what I think about allowing pets in larger buildings. Dogs can especially cause problems if they bark or have separation anxiety. Screen carefully.
Bill S., over 9 years ago
Bill,
Pet ownership is on the rise in our area(s), but I have not seen a corresponding increase in responsible pet owners, but rather many or are getting the dog as an accessory.
Allowing pets is a hotly debated subject internally for us. We do see as a way to increase our tenant base, but at what cost?
We have one tenant at the moment with a pet (out of 18), but are in the midst of a $20K full-gut renovation of another unit largely due to pet damage (most of it inflicted before we purchased the building). Statistically, no amount of pet rent collected across all our properties will offset the costs of rehabbing substantial pet damage in a a few units and the accompanying loss of revenue while a unit is unavailable.
At the moment we are still having no difficulties filling our units w/ a no pet policy, but are looking forward. We are contemplating acquiring a small multi close to one of our existing properties which is tired and in-need of updating and renovating it specifically with pets in mind. We've done all our homework and now need to decided if we want to invest the capital and effort to make it real.
Around here landlords charge $20 - $25/month for a cat; $25 - $35/month for a small dog and $35 - $50/month for a large dog.
Roy N., over 9 years ago