REAL TALK RENTALS

Allowing Pets In Properties

Ben Bailey: Coming up on today's episode of Real Talk Rentals, we're going to talk pets. Should you allow them in your rental property? We're going to answer all your questions coming up. Welcome to Real Talk Rentals, a podcast brought to you by on Q Property Management. We're going to give you all the tips, tricks and behind the scenes drama of property management and what goes into owning a rental property. I'm Ben, I'm your host, and with me as always is Mr. Eric Dixon, my co host, and the go to expert on all things rental property out here in Arizona. Today we're diving into a big question, something that always comes up, always, always. And that is pets.

Eric Dixon: Oh, yeah, yeah.

Ben Bailey: Lots of questions around this. We hear them all the time. So we're going to just dive right in here, Eric. The number one question, should a landlord allow pets into the property?

Eric Dixon: Yes, Ben, the answer is yes. All right. We're done here, right? Yeah. Yeah. I mean, the shorter the answer is yes, absolutely. They need to allow pets. We could actually dive in. This could be an hour long. We're not going to be that long. But the reasoning after we talk about it, hopefully a light bulb goes off in your head and you're like, Oh, yeah, of course I should consider accepting pets. So I'd say, Period. End of story. Yes. Consider to accept pets into your property as a landlord. If that makes you uneasy, then just keep listening and we'll explain it to you. So I would say what's funny is we so in preparation, pulled some statistics. So let me just I'm pulling out some paper here. So of. Renters in America. This is on bigger pockets and the Humane Society. So we double checked. 72% of renters have pets. So it's almost what is that? Three fourths of renters have pets nationally. I was telling you yesterday that I look at my my my in-laws side just as an example. It's like they have a pet. My wife's brother, sister, they've got multiple pets, all this stuff. So, yeah, everybody has pets. Then you look at my side of the family. I grew up with no pets and none of my siblings. But one has a pet. Yeah. So it kind of kind of goes like generational too. Like if you grew up with them, you're going to have them. And the more and more people that have them over time, it's just more, more and more people are going to have. So. So I thought that was interesting. 72%, I would have guessed maybe 50 to 60%.

Ben Bailey: Yeah, that seems high. It's crazy to think about.

Eric Dixon: But then we polled the office, so we've got an office about 50, 60 people and the overwhelming majority have pets. Yeah. So I think.

Ben Bailey: It's just you and I do not.

Eric Dixon: Have that. Well, and Matt, you know, our our guest a couple of weeks ago. Yeah, he, he has no pets too, so. And I love pets. I always tell people I love pets, love cats, love dogs, everything. Unless they're mine. Yeah.

Ben Bailey: I'm happy to visit your pet. I'm happy to pet your dog. I just don't you know, personally.

Eric Dixon: I love pets, just not when they're mine.

Ben Bailey: We're turning off three fourths of the audience by talking crap on pets.

Eric Dixon: No, but I as a landlord, I have learned to appreciate pets in a different light. And so that's kind of what we'll get at. So again, just a couple of statistics, very interesting and we'll just blaze through it. So top pets of that 72% that have pets, 40% are dogs, 25% are cats, 12% fish. Interestingly enough.

Ben Bailey: I would not have guessed that.

Eric Dixon: And then 4% reptiles and birds and miscellaneous. And so I think you brought up a hilarious one here. 4% of reptiles and 50% of the 4%. So 2% are millennials.

Ben Bailey: Millennials love reptiles, reptiles.

Eric Dixon: Maybe because they're just inexpensive to own or something.

Ben Bailey: Yeah, that's true.

Eric Dixon: Right? And they can have a little.

Ben Bailey: Terrarium or something. Minimal, minimal effort compared to a dog or a cat.

Eric Dixon: Yeah. So, so getting past the numbers here are the reasons I came up with why I don't think landlords would want a pet right off the top of my head, I would say odor property damage. Disturbance. Maybe like I own a few rentals in a community that's in an HOA, has a community pool and a park, really tight, small lots and stuff, and some of the pets there would drive me nuts so I could drive you nuts there. I know with dogs, dog bites, liability, stuff like that. Yeah. And then this is kind of on me because I'm not I don't have pets myself, but maybe personal reasons. It's like, No, I don't want pets because I don't I don't appreciate pets. I appreciate pets differently than someone else does. So maybe a personal reason is I just don't want to consider them. So I went through that as a landlord. Right? I've gone I've been a landlord now for 14, 15 years. And so I actually when I rented a room in my first home, it's kind of my first experience as a landlord in 2008. You know, my my roommate moved in. His name is Barry. He's awesome. He's also my cousin, but he he's like, Hey, do you want a dog? I was like, Heck yeah, I want a dog. I'd never had one growing up. I thought I was like, I thought I was getting screwed over by not having a dog growing up. And I didn't have that dog very long because I just wasn't home all the time. And I ended up giving it to an awesome family that loved the love the dog. But I realized most people have dogs. Like I rented this room in my home and he's like welcoming a dog into the house.

Ben Bailey: Right. Well, and it's funny you say that, like, for personal reasons, it makes me think of that kind of instinctual what we always talking about, like this emotion you put into it, where if I was putting a home up for rent because I don't have animals, I would just instinctively say, Oh yeah, no pets.

Eric Dixon: Yeah, no pets because I didn't have pets.

Ben Bailey: And I wouldn't even occur to me that I'm cutting out 72% of possible applicants. You know, I just wouldn't even think of that.

Eric Dixon: Oh, do you know what? So you hit the nail on the head. This is the point I wanted to drive home that I totally missed is So there's 72% have pets. Imagine if you put your house on the market for rent today, only 28% of that top funnel of people interested in renting in your city are going to consider your house. 72% are going to say, yeah, I don't want that. It says no pets. Yeah, and they might have a reptile in a terrarium and you're going to say no to their go to them or they might have a dog. That's not a big deal at all. So that is actually the reason we're talking about this, Right. Is the reason you should consider pets is a bigger renter pool. You know, so you look at the top of the funnel, you want as big as possible for leads coming into your rental. Sure. So if you say no pets, boom, 28 or 72% are gone. Right. And then of the 28% left, then you've also got other qualifiers credit score, income, debt, employment, rental reference, and you're closing in this gap of like, well, now there's only 0.4 people interested in your rental.

Ben Bailey: Right. And pets is in no way an indicator that someone doesn't have amazing credit and, you know, amazing rental history by saying, like you said, if you if you say no pets, they're not even going to apply most of the time. They're going to find the house that does. So they're not even you're not even going to have an opportunity and be like, oh, wait, this person is an amazing tenant and they just have a cat.

Eric Dixon: Yeah, no, absolutely no indication or bearing on the quality of tenant. Yeah. Whatsoever. In fact, pet people are amazing. They're obviously more loving than I am. So sure. They're amazing, amazing people. They're so bigger tenant pool. It just means more apps, more applications, more interest, more chances that somebody will like the property. So it's a no brainer. If nothing else, it just opens the funnel bigger at the top. It's going to statistically, it's going to rent faster. And just because there's more people interested, right? If you have 100 people interested, I don't want 72 of them to go away because they have a pet less time on market. And it eliminates our biggest cost in the industry, which I'll hit again. Every episode is vacancy rate is the biggest cost in being a landlord, so it's not a cost that hits your bank account and so you don't feel like it, but less vacancy, the better. And then in addition, another perk of having pets is pet rent. So I know we were we were talking to somebody just prior to the episode and they're like, Hey, can you charge pet rent in Arizona where you're at? It's like, yeah, I mean, it's a huge, huge way that you can make some more income.

Ben Bailey: Yeah, Yeah. There's one more statistic I wanted to say that we found, which was and this was on Zillow, but they said that. Pet owners are 60% more likely to renew their lease than non pet renters.

Eric Dixon: That's super. That's super interesting, actually.

Ben Bailey: Because, I mean, it makes sense when you think about because they don't want to go try and find another house that's going to allow their pets. You know, the pets are part of their family. So it's like, no, we're good here. Let's just renew.

Eric Dixon: Yeah. And so like the federal fair housing laws I just thought about this is that they can't discriminate against your children. So it's like, if I don't have pets, I can go to basically any house as long as I qualify. Right. But I could qualify for a house. And if they say no pets, it's like, oh, man, I can't go in that house. So that would make sense. So over 50%, 60% of pet owners renew. They're more likely to renew their lease. Yeah, that's that's just a bonus right there.

Ben Bailey: Yeah. So back to the cost. We were we were just talking about that. What, what can you charge? You mentioned Pet Rad. Is there a way to can you charge more rent in general. Like how does it work. As far as funds go when you're talking about pets.

Eric Dixon: Yeah. So pet rent, Well, I'll back up. So like ten years ago it was kind of market norm, at least in Arizona where it wasn't pet rent wasn't as normal per se, or popular as a pet deposit. And then it kind of shifted gears and then people did pet deposit and pet rent and now some just do pet rent. And so it kind of it kind of depends on your market. So I'm not going to say, hey, this is the the hard line. This is what you should do. But here are the considerations, right? You can do a pet deposit which covers for damages and neglect and so forth at the end of the lease. That's in addition to the security deposit. Right. But it's tied to the pet damage. Or you could do a pet rent, which is rent on top of rent, and it'll either be a flat amount or a percentage based. So the higher the rent, the higher the pet fee or the the pet rent. In some markets, it's going to be recurring fee every month. In some markets it's going to be a percentage, you know, a deposit. Right now, we're finding a lot of success in charging pet rent and it's additional income for the owner or and it helps helps you price strategically.

Eric Dixon: So what you want to do is advertise on all the third party websites at the lowest rent possible. So let's say your goal is to get $500 a month. Well, what you could do is say, let's price it at 1475 and charge $25 pet rent. And then you say, well, what if they apply and they don't have pets? It's like, well, sweet. There's one less thing in the house that can do damage, right? You get 1475. But if they have 1475 plus $25 pet rent, you've achieved your 1500 while still appealing to the masses on all the websites at 1475. So you can you can try and kind of work the system a little bit and say, what's the lowest base rent that I would accept? And then pet rents on top of that. Right. And it's per pet. So if they have two or three pets, people are absolutely willing to pay pet rent for a great house. Great. Absolutely. In the neighborhood, they want to be in, that's move in ready. And the only barrier is pet rent. It's like these are their kids. Yeah.

Ben Bailey: Yeah. It's part of their family. Yeah. Yeah. And I was talking to Mad about this yesterday, our portfolio manager, and he was saying that. Hint red just goes a long way to in, you know, comforting people that have those fears we talked about earlier the physical damage and stuff and saying like, look, just think it every month, you know, it's a year long lease. You're going to be collecting. Like if that dog chews up the baseboards, you're going to have the money to fix the baseboards. That's what it's.

Eric Dixon: For. Yeah, but and it's actually a double whammy. So if I'm a landlord, I have a property that I charged, let's just say $30, $30 a month. So I get $360 a month extra income. The pet does damage. Well, guess what? It's not just me paying the the repair and using that 360. You can still charge the tenant out of their security deposit. Right. To get the baseboard fixed. And I made $364. Sure. So, you know, it's like it's a no brainer. It's in no way ripping the tenant off either. It is it legitimately there's another breathing animal in the home that can do damage, whether it's odor, whether it's scratches, whether it's whatever. Yeah, it is a higher liability. You know, they pay more insurance. They pay. There are other liabilities there, but the pros far outweigh the cons. Sure to considering.

Ben Bailey: Pets. I have a friend. I'm going to bring you something here, a story that I didn't prep you for yesterday, but he I just saw this. He he lives in California, in LA, and he had to for an apartment. He had to fill out an application for his dog to as if it was another person.

Eric Dixon: Yeah.

Ben Bailey: Yeah. And they'll check and make sure the dog hasn't been in dog credit. Yeah. I mean, literally, it was like they checked because it had a chip, these dog chips. So they make sure that it's not like never attacked anybody or, you know, that it doesn't have DNA of a vicious breed. Or also, I mean, it's wild.

Eric Dixon: No, I mean, and it is you just literally have to treat it as as a kid, as one of their children. Sounds different. I like the way you said it, that it's just that's part of their family. Yeah. It doesn't matter if it's a hamster or a tortoise or a bird or reptile. A dog. A cat? Yeah. It's part of their family. And guess what? It's coming with them. So if you've been a landlord or if you have a management company even, and you're like, Man, I've gone seven years without a pet in my house, chances are there's been a pet in there. Yeah, but they haven't found out. And so what we found high success in is doing things like routine inspections and different things that we can go into later. But finding out I'd rather just be legit up front. Yeah. And then let's get this on the application. Let's figure all this out versus catching them later, know?

Ben Bailey: Yeah. So if you do catch them. What what it what happens? Let's say you have a routine inspection inspector comes back and says, hey, there's a dog bowl.

Eric Dixon: And Oh, yeah. Oh, dude, dog, this is the classic like, Hey, what happens if my landlord has or I'm sorry, I'm a landlord. So what happens if my tenant moves in and they have a pet they didn't disclose or it's not approved? Yeah, and it's a great question. And it's actually simple. Like you have, you have basically three options. One is we've talked about breach of lease before in the past where, hey, you breached the lease, we give them a ten day notice if they cure the breach, if they get rid of the animal, it's like it never happened. Well, usually people aren't like, Oh, you caught me. I'm going to go get rid of my dog. Yeah, It's like, no. So usually the ten day notice is just a formality. And hey, we call the owner, we talk to the tenant and we figure out option two, which would be, you know, you figure out a compromise, right? Whether you're getting pet rent, whether you're saying, hey, you've got to pay another deposit, hey, you've lied to us. So there's a little bit of trust issues here. So let's figure this out. That's usually what happens. Or the some owners are like, Yeah, don't do anything. They pay rent on time. I was there the other we did an inspection and it went fine. I'm not worried about it. So it's like you either do it, you could evict, you could evict them even with a ten day notice, and it goes to an eviction. Very, very rare for a pet like it usually doesn't get there. Usually it's kind of a disappointment. Like, Oh, man, I thought they didn't have pets. Yeah, let's charge pet rent, let's get a deposit, and we move on. And some owners are honestly like, Do you know what? They're awesome. They've been there for two years. They've paid rent on time. I got a rental increase last year and they bought a puppy for their kid's 10th birthday. Like, I'm not worried about it. Yeah.

Ben Bailey: It's funny you mentioned the routine inspections, but it's, I think the advantage of of having a a property management company and talking to our inspectors is I was asking them like, do you are you ever surprised you turn a corner and there's a dog there and they go, you know, the second you walk into a house, if there's a dog that you know, like you can smell it. Yeah, like there's evidence everywhere. Like dogs aren't, you know, sneaky. It's not hiding. So they're like, no, we always know. We always know when there's a dog.

Eric Dixon: Yeah. And it's either physically I see it or I smell it, or there's a family photo on the wall and it's like, that's where there's two dogs in your photo. Like, I don't know. Yeah, it's just.

Ben Bailey: Hair all over the couch. I mean, whatever it is, you know, it's the advantage of having eyes on your property, of making sure that you're checking.

Eric Dixon: Up on it. One of my favorite things to to tell owners again, if they're like, Well, I guess I'll accept a pet. You know, that pet rent's nice. And I tell them, we'll use your pet rent and pay your property management company to do your routine inspections. So, like, we charge a flat fee for our routine inspections, Sure. A lot of people, they'll charge an annual fee or something like that. It's going to be far less than the three or $400 a year that you made extra. So it's like, yeah, I'll accept that, and then I'll use a little bit of that money to pay my management company to go do those inspections, take pictures, document it, and just make sure that everything's taken care of.

Ben Bailey: Sure. Yeah. And I would bet, too. I mean, this is maybe me giving too much of the benefit of the doubt, but there probably is a fair amount of, you know, if someone's living in a I've been in my rental for five years now, right. And my kids want a dog. They ask me every day and I'm thinking more of my making my kids stop harassing me that like, okay, fine, we'll get a dog. And then I realized that I tell my landlord, you know, like, I can see that happening where it's like there's people honest mistakes of like, oh, I, I inherited this cat, you know, or a.

Eric Dixon: Lot of people, they make their rental, their home, right? And if everything's going well, if the landlord and the management company are taking care of maintenance and I pay rent on time every month and everything, it's not top of mind for them to be like, Oh, do you know what? We better ask our management company or we better ask the landlord to get this. And frankly, a lot of them are probably like, I'd rather ask for forgiveness than permission. Sure. And and so anyway, I can't fault them either way. Pets are it's an intangible thing as well as a physical thing like the intangible love and the emotional side of it. You just can't can't measure. So I get it. The overwhelmingly it's really just if our landlords and those listening can just be open to the idea. Right. I know right now we have some owners that they're struggling. Their houses have been on the market for longer than they should and they are strict, strict, strict, no pets. And so we tell them like, fine, that's okay if that's how you want to be. But the compromises, you need to be very aggressive on your rental price, right? Because you need to make that that funnel bigger. You need to say, hey, I'm not going to accept pets, but I'm going to price it so aggressive that the funnel is going to be big because it's just like, Wow. House is attractive and it's priced right. Right.

Ben Bailey: Right. So to tie things up, I wanted to touch on something that is a big deal in our industry and that is essay animals.

Eric Dixon: Oh, yeah.

Ben Bailey: I hear about it all the time. What what are what are the rules? Can you say no to an essay? What is an essay? Animal in.

Eric Dixon: General? So an essay animal is an emotional support animal. Animal. So anyway, people say it all the time. Do you take essay animals? And it's like, yes, we take essays. So but yeah, it's an emotional support animal. So it's a big thing, especially as mental health is becoming more prevalent. I think essay as a as a tool has been around for longer than than we know like it's been around forever people have had.

Ben Bailey: Before we had a name for.

Eric Dixon: It before they had a name for it. It's like, no, I have this dog. It makes me feel good. But they didn't realize it's their therapy animal or it's their emotional support animal. And luckily it's becoming more of a normal narrative. It's not taboo to talk about, and as a landlord you have to know a couple of things. Number one, an essay as far as the law goes, is not a pet, you know? Right. The best analogy that our actual our attorney, we have a great attorney that helps us further understand and educate our owners on different things, he said. The best analogy is imagine somebody with a disability. Let's say I, I have a disability and I require a walker or a wheelchair. Let's say a wheelchair. You can't deny me because I have a wheelchair. But that is a tool and a solution and a help for my my disability. Liken that to somebody that has the disability of some sort of anxiety or or some disability, a mental disability. And they prescribed prescribed by a doctor or a health a health provider has prescribed them a support animal that says, Hey, this Chihuahua or whatever is your support animal, that is their wheelchair, that is their walker, that is their tool to to help them, you know, honestly for some exist and be happy and find and find joy in life and you can't deny them for that. So I said an essay is just like a wheelchair if you say in that in that analogy. Yeah.

Ben Bailey: And so you would never say, I don't want a wheelchair in my house. Yeah. So absolutely. You can't say Yeah. And I think when we were talking about this yesterday, what you said that made the most sense to me is they're not pets.

Eric Dixon: Yeah.

Ben Bailey: Yeah.

Eric Dixon: And I say is not a pet. It's not a pet. And there probably is even a better word for it that I could use at the top of mind right now. It's a tool. It's a it's a solution. It's a prescribed medication almost, where it's like that is prescribed by a doctor. And when we get an application, you can't just say, Oh, yeah, I have an essay and we approve it. They do have to submit the documentation signed off by the doctor. It has to be it has to be recent. It can't be from seven years ago, you know, just like a prescription would be, you know. And so another thing to know about essay and emotional support animals is that you can't chart pet rent because it's not a pet. Got it. So you can't charge extra. You can't charge and say, hey, there's an extra deposit, there's extra pet rent. Some owners get frustrated with that because they're like, But there is going to be an animal in my home. I want more money or more deposit, and they'll even say much, So much. So it's like, Well, I'm not going to charge pet rent, but the base rent is $50 more. Yeah. Like, well, can't do that either. He's advertised it this price and they applied and they check all the boxes. Over the years I've had to have some hard conversations with clients owners that we present the application and say, Hey, great news.

Eric Dixon: We got this, this, this. They're qualified, they're moving in next week and they have an essay and they'll be like, Oh, well, no, I'm not accepting it. I whatever we have to do, don't approve that application and then we have to educate them, pull it back and and really help them understand why and how it's not even an option. So I'm okay educating the owners with that as long as they have an open mind of like, oh, this is the law and it's a federal thing and it's fair housing, it's it's everything all encapsulated. It can have. The only last thing I'll say there is it can't have a bearing on their decision to accept an applicant. Right. So for example if you get an applicant and they had a actually my dad this was two or three years ago had an application and they had a DUI or something a few years ago. And, you know, normally it's like, hey, there's a convicted felony and you would just decline them. Well, he's like, do you know what? It's been a few years. Let's let them let them go in. But if I would have presented that and then I said, okay, great. You you approve them, By the way, they have an essay.

Eric Dixon: And if he changed his mind and said, Oh, do you know what. Yeah. Decline them for that. What that tells me is it would have had an impact on the decision. Right. Right. And so it can't have an impact on the decision. There are oftentimes owners are willing to work with people, hey, you didn't check every box, but they're willing to work with you. But if that decision to decline them is because of an. Issa Yeah, we can't do that. And landlords, if you're self managing, this is a trap. Fair housing. And Issa is one of the biggest traps that people go into. Yeah, because oh, this is going great. This is going great. And they're like, Oh, by the way, I have two Issa animals. And you're like, Whoa, whoa, whoa, I don't want that. If it's legitimate and it checks checks out like there's nothing you can do. Yeah, we have unfortunately terminated clients because their stance on Issa is so wrong. Yeah. And we're like, Hey, I'm sorry we can't do business together. We have to let the applicant know that. Hey, I'm so sorry. This owner never. We're actually not managing their property anymore. Yeah, and. And we'll refund your money and move on. But yeah, I mean, Issa just know that it's. It's a serious thing.

Ben Bailey: Yeah, I have a my cousin is visually impaired. She's not blind, but if you interacted with her, you probably wouldn't realize, like, she can look you in the eye and talk, have a conversation. But she has a prescribed dog that, you know, like kind of helps her and makes her go through and stuff like that. And it's like you wouldn't say no to that. You know, if a landlord said, hey, this this woman, you know, could accidentally hurt herself if she didn't have this animal, you wouldn't say no to that. So it's like just, you know, don't assume you know someone that's a story. You know, if they say, hey, they have this, it's just err on the side of OC, you know.

Eric Dixon: Yeah. Well I think it's like anything in life, what you hear, the negatives that you hear with pets and Issei and all that other stuff is people taking advantage of the system. Yeah. And so I do think Issei in general, I don't know a percentage, 90, 95% plus no problems, they're great. And then there's that 5% or whatever that make the news and it makes this big story and they did a fraudulent doctor's note and they snuck into this house and it became an issue that's just part of of life, you know. But I think in general, like you said, it's not an issue you shouldn't stress about it, except don't decline somebody for having Issei.

Ben Bailey: Right. Right. All right, man. Well, I feel like I have to get a dog now.

Eric Dixon: I know. I actually I actually feel bad. So full disclaimer, you know, I don't have any pets. I actually had a couple of tortoises. I had a dog once, gave him away to a great family and then had a couple of tortoises. Yeah, but I'm allergic to cats. Legit 100%. And you keep on telling.

Ben Bailey: I think you're allergic to dogs.

Eric Dixon: You know, I'm allergic to cats, but I'm like, I probably am the dogs too. Yeah. No, but I actually I get it, you know, And being a landlord, having a having involvement in management for, for what is it, 12, 13 years now, accepting and being considering pets for your rentals is a no brainer. You will make more money, you will have less vacancy, you'll have less issues, you'll have a higher renewal rate, right? It's just a no brainer. So hopefully that helped everybody kind of get that summary.

Ben Bailey: All right. Well, that's it for us this time. Be sure to subscribe and leave us a five star review if you can. It really helps out and we will see you next time.