In our experience as a management firm, 60% or more of the tenant pool that may be interested in renting your home are also pet owners. Simple math tells us that landlords that don’t accept pets rule out more than half of the potential tenants before they advertise their home. Landlords that are open to considering pets will have a much higher likelihood of interested parties, showings, and offers when their property is on the market.
So , does McGrath Real Estate Services recommend you accept pets at your home? Not specifically. We do however, recommend you at least consider the pet, and more importantly, the pet owner on a case-by-case basis to better evaluate your options by using strategic business sense.
Often, homeowners like yourself, fear that you don’t want your home to become destroyed by pet odors, stains and scratches. McGrath Real Estate shares your concern and wants to protect your home too. However, upon taking a deeper look you will find that this type of application represents a different kind of “stereotype.” Let’s look at the facts:
EXAMPLE: Your home is on the market for rent. For this example, we’ll say the home is available
on July 1st for $2,500 per month and that you will consider pets on a case by case basis. Suddenly you have an application presented to you! It poses several strong points, but also presents some potential risks. Typically, we have some hesitation from landlords when we present an application from a potential tenant with pets. This hesitation is prudent, but it is important to explore the risks and the facts before making a decision based on generalizations or fears.
In our example, the applicants are willing to move in July 1st. This means rent starts coming in with no vacancy time in between tenancies. There are expenses in lawn maintenance and utilities while the house is vacant, and certainly rental income vacancy loss is something we know is undesirable to all landlords. The applicants are offering a security deposit of $2,500. Now, let’s say for a moment that you decline this application. The next application comes in but they are offering a lease start date of August 1st. Even if this next application is offering $2,500, and IF they represent “less risk” (no pets) the value lost in waiting for this second application is $2,500 in vacancy/opportunity cost. Additional variable costs could include utilities and lawn maintenance between tenant move-out and August 1st move-in (likely would amount to approximately $300).
That $2,800 difference in waiting for the next applicants is what we call the “hidden deposit”. In the worst case scenario, IF the original applicants become a problem in terms of pet damage, you have a $2,500 security deposit + the pet deposit (normally $500 for the first pet and $250 for each additional), PLUS the July rent that you would not have received otherwise. This $5,500 will hedge against your risk if the pet(s) does damage your home. In our experience it highly unlikely that the cost to re-paint, re-carpet or re-finish hardwoods, and repair any other damages caused by pets would exceed this amount.
The above example offers an objective view of renting to tenants with pets but there is a subjective approach we take to pets as well. The processing of all applications includes a landlord verification from both the current and previous landlord. If the applicant has a pet, we ask both landlords about their experience with the pet; was it well-behaved, did it cause damage etc? If the landlord gives us a negative report about the pet we WILL NOT recommend you accept. We also recognize that all pets are not equal. There is a difference between a four month old puppy and a five year old Labrador. We always require applicants to provide the type, breed, age, size, gender and whether it’s been spayed or neutered for all pets. If we deem the pet to be an unacceptable risk to you, we will not recommend you accept.
There are also indicators that we look at to determine the responsibility of the pet owner. Those who are accountable in their lives tend to be responsible pet owners. An applicant with a 750+ credit score, great landlord references and stable employment shows they have organization, responsibility and care in managing the financial aspect of their lives. This tends to extend to the way they treat, train and care for their pets. As always there is no way to guarantee any applicant’s pet will not damage your home but our annual inspections are an excellent way to “check-in” and verify the pets aren’t damaging the home and if they are fix the problem immediately.
The alternative again is waiting to see what the next application brings. Even if they present less risk as applicants, maybe the next applicant will also have pets, or maybe their incomes are less stable or too new, or a further back start date, or a lower rent offered, etc. That initial offer you passed on with pets and otherwise perfect applicant with little to no vacancy time suddenly looks like the “one that got away”.
We know that it can be scary to accept pets, especially with nightmare stories out there (which are the exception, not the norm), but please try to use non-emotional business reasoning in your analysis. Feel free to consult with us. We certainly don’t intend to push you towards taking applicants if you are uncomfortable and have good reasoning for not doing so. We ask you to consider pets which can help you achieve your cash flow goals, and can still buffer against your risk for damage. If you have questions feel free to contact the Leasing Department at Leasing@McGrathRealEstate.com.