Renting To Tenants With Pets

In 1988, the first year the American Pet Products Association conducted their annual National Pet Ownership Survey, 56% of households were home to dogs, cats, and other furry (or non-furry) friends. The latest results show that number has grown all the way to 68%, or about 85 million American households. What’s more, pet spending has increased by an average of 8% year-over-year from $17 million in 1994 to just shy of $70 million in 2017. The message is clear: Americans love their pets.

For renters and homeowners, a pet is a member of the family. But for landlords, the decision to permit pets in a property can be a complicated one. The purpose of this article is to give you a strong, general understanding of all things pets: where the market has been, where it’s headed, the risks, opportunity, insurance and legal considerations, and anything else you could hope to know before renting to tenants with pets.

Pet Owners Have Created a New Market Segment

According to the Bureau of Labor Statistics, on average, a household will spend about $500 on pet products (this number does not include food or vet bills). And, as mentioned above, that number has continually grown year after year. People are clearly willing to spend on their pets and savvy entrepreneurs have taken notice. More and more brands are creating pet-specific products from (borderline irresponsible) boutique pet hotels and vacations to doggy energy bars. There even exists pet nail polish. People love their pets and, as a landlord, it’s important to recognize this opportunity.

Pet-Friendly Places Are Rapidly Expanding

People often feel guilty leaving their pets at home while they work or spend time out and about. Smart businesses are starting to realize that, by alienating pets, they are alienating over half of their potential customers. Restaurants, hotels, and workplaces are re-writing their policies to accommodate pet parents. Dog parks are popping up all over and bars are hosting “yappy hours” for mom, dad, and dog-child. Pet-friendliness and accommodation is becoming an expectation.

Bring Your Pet to Work

The importance of personal independence and life outside of work first gained traction in the 70s and 80s. Many studies were published demonstrating that a healthy work-life balance was critical not only to physical and mental well-being, but also to the quality of work an employee could provide. There are quantitative incentives for a business to keep their employees happy, and, in its earliest stages, attention was placed on giving workers a break from work. Innovative managers and companies have since flipped that dynamic on its head and, rather than keep work out of the home, they’ve pushed to bring the home to work.

And while not every business can provide an on-site barber, one simple step many have chosen to take is to open their offices to pets. Not only does everyone love to see a dog roaming around the sea of standing desks and Feng Shui lounge furniture, but it also removes the need for employees to run home at 5PM sharp to let Fido out. Pets are also known to be great stress relief, which can be extremely beneficially in the competitive world of a successful business. According to the American Pet Products Manufacturers Association, nearly a quarter of employees believe you should be able to take your pet to work and that number is on the rise.

Commercial landlords should be aware of these recent trends. If you rent out an office space, prepare for and perhaps even expect a push from your tenants to allow pets during the day. The risks (which we’ll get to in a bit) aren’t as severe as those a residential landlord faces, but they still exist. Pets in the office space can become a problem when it comes to liability. Many company insurance policies are not meant to deal with possible damages caused by an employee’s pet. Open communication between landlord and tenant, especially on the commercial side, is key to ensure your property is treated the way you expect.

Fair Housing Law

The Fair Housing Act was created to protect individuals who might experience discrimination when searching for appropriate housing. Most commonly, this applies to race, age, and gender. So you may be thinking, “What does Fair Housing have to do with my tenant’s pet otter?” There are specific laws that extend to individuals with mental or physical disabilities who require the assistance of an animal companion. These animals do important work for their owners and are not pets, so regular pet policies do not apply to them. Even if your rental property has a no-pet policy, you are not allowed to violate the rights of a disabled individual who requires support from a service or assistance animal.

And there is a difference between the two. A service animal has been specifically trained to perform tasks. Think seeing-eye-dog or seizure-protection-pup. An assistance animal, on the other hand, does not need to be specifically trained to perform a service for their owner. Typically, assistance animals are there to provide emotional comfort and reduce anxiety. The handler only requires a note from a doctor or therapist to classify their pet in this way (something airline passengers have maybe taken advantage of…). As outlined in the Fair Housing Act, a landlord is required to make reasonable accommodation for both service and assistance animals.

Check Your Insurance

Pets are loving and wonderful in many aspects, but it’s important to remember that they are animals. Pets large and small have the ability to cause significant harm to people and property. Double-check your insurance policy if you decide to allow animal tenants in your rental. It is important to understand the amount of liability coverage you have through your insurance company. Also, ask your insurance company if there are any limitations or exclusions to this coverage. This might include a list of “dangerous breeds” that would not be covered under the insurance policy. Finally, be cognizant of neighboring tenants – if there are major allergies or even anxieties, allowing pets may have consequences you didn’t anticipate.

Non-Traditional Pets

While dogs and cats are the most popular types of household pets, some prospective tenants may wish to bring more unexpected companions into your property. When considering exotic pets, step one should be to ensure the pet is legal to own in your state. Common exotic pets range from snakes, bugs, mice, hamsters, spiders, pigs, and birds. It is even more important to prescreen these pets (and their owners) in the same way you would a dog or cat. Do a little research and understand the risks and maintenance of the specific animal. Also, require your tenant to be upfront and help educate you about their exotic pet. Small rodents or reptiles should be in properly secure cages or tanks. Some reptiles require heat lamps or other electrically powered devices that could pose a threat to fire codes and drive up energy costs. Double check with tenants about the placement and safety of any electric devices required for the care of their pets.

5 Benefits to Allowing Pets in a Rental Property

1. Expand your potential tenant pool: With pets in 68% of households, many people are searching for rental properties that allow their furry friends. Even if a prospective tenant does not have a pet while searching for a place to live, pet-friendly properties are a highly sought-after amenity.
2. Happy tenants: Animals are proven to help reduce stress. Your tenant might feel more relaxed and at home with a pet around. And happy tenants are better tenants.
3. Additional income from pet fees or increased rent: If it helps, think of pets as an additional tenant. Renters are willing to pay extra to cover any extra costs that may be incurred by their pet. Pet fees help give you piece of mind (and an additional revenue stream!).
4. Tenants might stay longer: Finding a rental property that allows pets can be difficult. Pets also do not adapt to change in their environment well. Pet owners are more likely to stay where their pets are more comfortable. And, because not all properties allow pets, you’ll have a leg up in retaining them.
5. Sneaking in pets: If you have established pet rules in place and know your insurance will cover anything pet related, you will not have to worry about the dangerous liability of tenants sneaking in pets.

5 Risks to Allowing Pets in a Rental Property

1. Damage to your property: Pets can cause damage to the floors of your rental unit: chewing on wood or carpet, leaving scratches, and having accidents.
2. Pet odors: Allergens and dander in air ducts might require professional cleaning after the tenant and their fury friends have moved out.
3. Disturbing neighbors: Barking dogs, hissing cats, and other animals running around might disturb neighbors both inside and outside the building.
4. Loss of other tenants: Other tenants may choose to leave your property due to allergens or noise associated with pets in the building.
5. Injury to others: Every dog has the ability to bite and cause bodily harm. Even with the promise of a well-trained animal, there is still a chance of the animal biting another human. According to the Centers for Disease Control and Prevention, 4.7 million people are bitten by dogs every year, with 800,000 of those cases needing medical attention.

5 Ways to Minimize Pet Risks

1. Evaluate Personality of Breed: According to statistics found by the CDC, there are some breeds more likely to cause bodily injuries. A CDC Special Report created from 1995 to 1996 collected the number of dog bite-related fatalities sorted by dog breed. While this data should be considered in your decision in allowing pets, it does not account for all dogs of those breeds. Dangerous breed lists should be taken with a grain of salt. Many sites claim to have the CDC’s list of the “most dangerous breeds” but this list was not meant to be turned into “the top 10 most dangerous breeds.” The CDC has since stopped publishing statistics by breed because of the misuse of this data. Steven Dale explains in a blog post how not all data variables can be accounted for in-regards to dangerous breed lists.
2. Require Pet to be Spayed or Neutered: Pets that have been spayed or neutered are more likely to have calm personalities and behave. According to the US Humane Society, unneutered dogs tend to be more aggressive and more frequently urine-mark their territory. While aggression is less likely in female dogs, unspayed females will be in heat monthly and have the potential to bleed on your carpets and wood floors. Additionally, females in heat need to urinate frequently and howl to attract mates. Other problems with unneutered or unspayed pets include aggression, roaming, excessive barking, and inappropriate behavior (think humping the in-law’s leg). Requiring cats to be spayed or neutered is also an important thing to consider. The urge to spray (read: mark their territory) is a major issue for unneutered cats. Most of this behavior can be solved in cats if they are neutered, even if it has been going on for a long time.
3. Screen your tenants and get references: When considering an applicant for your property, it is important to speak with any previous landlords and check references, whether they have a pet or not. Be sure to ask about both the applicant’s and pet’s behavior. Remember the question, “Would you rent to them again?”
4. Charge higher rent: Do your research and see how other rental properties are handling pets. If you are in a location with few pet-friendly rentals, you may be able to charge more per month if you allow pets. Think about the unique value of your properties over your competition. Pets can also be treated as an additional tenant, allowing you to charge a couple hundred dollars more per month. This will help to cover any damages or additional maintenance caused by the pet and / or owner.
5. Collect a larger security deposit: You will be able to justify requiring a higher security deposit because of the risks associated with pets. This money can then be used after move out to repair any longer-term damages. Bankrate points out that tenants will be more motivated to ensure their pet does not destroy your property if you make the deposit fully refundable.

Bonus:

Pet resume: Requiring a pet resume for an applicant’s pet may feel a little extreme to some, but a responsible pet owner should have no problem creating a short resume to help the pet screening process. This requires the tenant to put some thought into their pet’s behavior and gives you a quick overview of both tenant and pet. It might seem strange, but it’s not unreasonable.

Maximize Your Lease

If you have a strict no-pets policy, be sure to include all details of that agreement in the lease. Any questions or objections a tenant could have should be addressed. This way if the tenant does bring in a pet, you are protected through the lease and can terminate it if any rules are violated.

When allowing pets in your properties, another tip is to use a pet addendum. The addendum should be a separate document attached to the end of your lease outlining all rules and guidelines regarding the tenant’s pet. This will be the place to include any information about a pet fee or deposit, breed restrictions, maintenance costs incurred by pets, and any other details you feel are necessary.

Know Your Stuff and Make a Pet Decision for You

Allowing pets in your rental properties is a big decision. There are some monetary benefits, but pets also come with potential damage to your property or legal trouble. Do your research to help understand all sides of the argument for allowing or not allowing pets on your property. Feel confident that your research will help guide you to the best decision for your business.

For more interesting articles on managing your properties, be sure to subscribe to our blog and Like us on Facebook. And don’t forget to share your thoughts in the comments!