Pet Policies, Part Two: 6 Ways to Prevent Losses from Pets as a Landlord

pet policiesIn Part One of this two-part series on landlord pet policies, we covered how landlords can actually raise their returns and earn more money by allowing pets in their properties.

Those pet policies, however, are only half the story. To come out ahead financially in the long term, you also need to prevent losses caused by your tenants’ pets.

If the last article was all about playing offense, today we’re focusing on defense.

Here are six ways to make sure you NEVER lose money due to your pet-friendly policies, so it’s all upside for you as a landlord.

1. Conduct Quarterly or Semi-Annual Inspections

Even as a pet-friendly landlord, you’ll get the occasional pet sneak.

Far too often, tenants will try to bring in undisclosed pets and avoid paying the monthly pet rent. It’s just one more in a long line of reasons why you should conduct regular inspections of your rental units.

Regular inspections send a loud, clear message to your renters: You are not an absentee landlord. You pay attention, you care about your rental properties — and your tenants should care, too.

During these regular inspections you can keep an eye out for concealed pets (or, for that matter, any other lease contract violations).

Quarterly or semi-annual property inspections also serve as a deterrent: Renters won't even think about trying to sneak in pets without telling you. They know they’ll get caught if they try, and the same goes for other common lease violations.

But regular inspections are not just about lease contract enforcement. Face-to-face interactions also help build trust between you and your renters.

It’s all too easy for renters and even landlords to slip into an adversarial mindset, but regular face-to-face meetings help you build a more human relationship. They’ll be less likely to think of you as someone who should just be cheated on principle.

2. Install Indestructible Flooring

Carpets and pets don’t mix well. Ask any dog owner who just bathed their canine companion.

Beyond the obvious risk of stains, carpets hold odors. Also, they are nearly impossible to rid of fur and dander, making the property a no-go zone for any future prospects with allergies.

Then there are hardwood floors; they look great, but they’re easily scratched by dog claws (or, for that matter, tenants carelessly sliding furniture across the floor.) Hardwood floors are also expensive to install, refinish, or replace.

Instead of these, consider a few less expensive – but tougher – flooring options.

One option is bamboo. It offers a look and feel similar to hardwood, but it’s less expensive and harder than many hardwood options. The grooves and lines in bamboo floors can also hide any scratches that may occur.

Another route is luxury vinyl tile (LVT). Beyond being strong, there are waterproof versions available, which make it virtually immune to pet messes … and spills, leaks, flooding, or anything else, for that matter.

While LVT can look like wood, there are other faux-hardwood options available as well. Many of them are extremely strong, and scratch-resistant.

Avoid carpets and hardwood floors in your rentals and find flooring that’s virtually indestructible, without sacrificing that upscale look. (You'll thank yourself when you find you don't have to replace or fix flooring after each tenant vacates.)

3. Require Documentation for Support Animals

A troubling trend in recent years is the rise of tenants claiming that their pets are “emotional support animals,” to try and circumvent landlord pet policies.

That’s akin to claiming you have a disability, so that you can park in a handicapped parking place.

The world is full of people with legitimate disabilities, who need true service animals in order to function. When charlatans start throwing around claims that their pet is a “support animal” just to avoid paying pet rent, it makes life that much harder for people with true disabilities and service animals.

When an applicant claims that their pet is a “support animal,” tell them that you welcome both pets and service animals. However, say only medically required service animals are exempted from your pet policies, and you require documentation from a primary physician for all medical service animal exemptions.

It's easy to keep this conversation polite, professional, and legally compliant. Your rental property is pet-friendly, but your pet policies apply to all pets not documented as medically necessary service animals.

Renters with true disabilities likely have documentation already in place for their service animals, and will have no trouble acquiring it from their doctor if not.

While a few tenants will actually get a bogus letter from a doctor, most will back off when challenged on the legitimacy of their “support animal” claim.

4. Require Renter’s Insurance That Covers Liability for Dog Attacks

It’s uncommon for landlords to be successfully sued over a tenant’s dog attack on a neighbor. But that doesn’t mean landlords shouldn’t shift liability elsewhere, to prevent anyone from trying.

When a renter has renter’s insurance that covers liability for dog attacks, that makes the insurance company the juicy target for lawsuits, rather than the landlord.

Even if the tenant fails to buy the required renter’s insurance, as long as the requirement is in the lease contract, the landlord at least has a case for the judge:

The tenant violated the lease requirement to maintain insurance that covers attacks.”

Landlords can also use their lease contract to include clauses about pet aggression. If a dog demonstrates aggressive behavior, for instance, the lease can require that the dog be removed from the premises, on penalty of eviction.

Of course, that means the landlord must actually enforce that rule, if the dog does threaten or attack someone.

RELATED: TENANT PROOF: How to Make Your Rentals Indestructible

5. Don’t Allow Prohibited Breeds — Period

Does your landlord insurance specifically exclude covering damage or liability from specific breeds?

What about local laws that single out specific breeds?

Here’s a quick anecdote for you about democracy at its worst. In Baltimore City, where I own rentals, the City Council wanted to outlaw pit bulls. But community polling revealed there would be significant backlash among constituents, if a bill were proposed. So, what did the City Council do?

They instead passed a bill making landlords liable for any attacks by a tenant’s pit bull. That way, they get to have their cake and eat it too. Landlords stopped allowing pit bulls, and the City Council could throw political blame on already-hated landlords:

“We didn’t outlaw pit bulls! It’s these mean landlords who don’t allow pit bulls, not us!”

If you have any breed-specific liability, from either your insurance or local government, ban that breed from your rentals. Hard stop.

6. Charge a Higher Security Deposit

We don't mean a “pet deposit.”

Legally, all refundable deposits are classified as security deposits. They’re subject to the same state law limitations (e.g. two months’ rent).

When you classify part of the security deposit for a specific purpose, it gives you no upside, but it does have a downside: You can now only use that part of the deposit for that kind of damage.

Say your lease contract lists a security deposit of one month’s rent, plus half a month’s rent for a “refundable pet deposit.” Then the tenants cause thousands of dollars in damage to your unit, that did not involve the pet.

Because your lease specified part of the deposit for pet damage, the tenants can make a case that you owe them that money back, because there was no pet damage.

As part of your pet policy, simply require that all tenants with pets pay an additional amount toward the security deposit. It’s that simple.

Most states place limitations on security deposits, and some also impose limitations on pet rent and non-refundable fees. Double-check your state and local laws!

Remember: Pets Are Good for Your Business.

Pets do cause more wear and tear on rental properties — and that’s fine> if real estate investors charge accordingly and protect themselves and their properties with a comprehensive pet policy.

Play offense by finding ways to earn more money from pet owners and marketing your property as a beacon for pet-owning renters. They’re willing to pay more in rents, in services offered, and in fees and deposits.

Then, play defense by ensuring that your unit can withstand the extra abuse and that you won’t be liable for attacks or for extra damage caused.

Pet owners are an underserved niche in the rental industry, which makes them an excellent opportunity for savvy landlords. Higher rents, higher deposits, longer tenancies, fewer turnovers and labor — what's not to like?

Do you allow pets? What have your experiences been? Horror stories? Success stories? Share your thoughts!

G. Brian Davis has been a landlord for most of his adult life, and has served as a rental expert for USA Today, Huffington Post, Fox News, Realtor.com and dozens of other publications. He co-founded SparkRental.com to provide free training for landlords, and services ranging from lease contract packages to automated rent collection to tenant screening.

 

Join the discussion 7 Comments

  • In my opinion, people are applying to live in a residence I own, therefore my rules apply and one of those is no pets. This alleviates the need for pet deposits, pet flooring, pet insurance and the like. When they get their own mortgage they can have all of the pets they want. It’s enough to deal with people and their values and habits without bringing a pet into the mix. Not everyone can care for a pet nor should have one.

  • Justin B. says:

    I like allowing pets. Helps me get many more applications, which means I end up with better tenants. And I’ve found they stay longer, since it’s harder for them to find good housing.
    But you’re right, you definitely need to protect yourself as a landlord. Pets do cause more damage, so landlords need policies in place to cover those extra expenses.

  • The 1st article that is part-1 on landlord pet policies was nice and it was good to take these types of suggestions from you. And I believe these tips helps a lot to many landlords like us. These days it is very necessary to make these types of policies. Also we can earn extra income by fixing rates along with rent. Yes we can conduct quarterly or semi-annual inspections to have a regular check. Installing indestructible flooring is also a good idea. Documentation, insurance is compulsory these days for pets. Extra charging will benefit the landlord very much. Thanks for giving these suggestions & keep writing these type of articles and will be eagerly waiting for your next article.

  • Rick Aurora says:

    I think it is a good idea to allow tenants with pets but making sure that there is a security deposit to secure the property from any damages done by the pet.

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