Tenant Requested Lowered Rent AND a Dog

[Stephanie Jamgochian]

I own a "B+" SFR in a HCOL university town with vacancy rates under 3%. I've owned this unit for the last 2.5 years and have had three turnovers since (first tenant broke lease after 5 months due to job loss and then rented to four college students the next 9 months. They graduated and left). I currently have a family-two parents, one with 6 figure professional job; other with a part-time professional job but is mostly a SAHM. They have three kids in high ranking public school half a block away. They have paid on time with the exception of one month when they were a week late (early on in their tenancy, in which I charged them a late fee as per lease agreement). They have been very good tenants and they are keeping the house clean and well. They have told me how much they like the house.

My question: They have asked for a 5% reduction in rent PLUS they want to get a dog.  Currently the lease states no pets and they have honored that.  Data research from 2018 shows that for our area, the rent is under the median price for a 4/2.  It's also been completely renovated, although it's on the smaller size, square footage compared to other houses in the neighborhood (1,500 sq. feet).  I also don't want yet another turn over as I've calculated at a minimum that would entail half to one full month's rent, which is less than the price reduction, however I'm reading most people actually INCURE additional rent for the addition of a dog.  I feel that based on my interaction with them, that they would be responsible pet owners, although pets always incur a level of damage.  However, based on the fact that their kids are in a school where they are happy, the low inventory of houses in our area, and the fact that many landlords don't allow pets, leads me to think they will be long-term tenants, which is what I'm looking for.  

Thoughts and advice from seasoned landlords?