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?

[Jason Ray Richardson]

I would say probably don't do either because once you give an inch they will take a mile. OR if you want to meet them "half way" allow certain pets but they will have to pay higher rent and a non refundable pet deposit. 

[Mindy Jensen]

Tenants can request anything they want. In an area in such high demand, I would say no to both. I'd remind them of their required notice per their lease (30, 60 days or whatever your lease says) and tell them that if they'd like to move, they are welcome to do so with the proper notice. 

I would also consider raising rent at the end of this lease term. 

[Scott Wolf]

Originally posted by @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?

 3% vacancy plus under median rents does not equal a rent reduction.  If anything, it means a standard 2-3% rent increase at the minimum.

As for the pet, that's up to you, for the litany of reasons mentioned before (hardwood that can be damaged, complaining neighbors etc.) but if you do so it will definitely require additional security deposit.

[Colleen F.]

@Stephanie Jamgochian if they are in a crappy school district they are not comparable. Case closed. School district is alot of value.

Let him move to the crappy district.

[Eric Carr]

Originally posted by @Stephanie Jamgochian:

Thank you everyone for your responses! This has been very helpful.  Leaning toward no lowering of rent, allowing the dog with a pet deposit.  

Many here have suggested collecting a "non refundable pet deposit" - NOTE that is not legal in CA

All deposits are by law, refundable. You are allowed to collect a deposit of up to two months rent for an unfurnished rental and a deposit equal to up to 3 months for a furnished rental. 

Here's how I do it, take what you feel works for you: I don't gouge a good tenant because they love their dog, no pet rent, no nonsensical nonrefundable deposit - which I've already mentioned is illegal in CA. But you need to cover yourself. Collect a deposit, maybe equal to another months rent to cover any losses caused by the pet. Also, use a lease addendum/pet addendum for the dog. Make sure it's spayed or neutered, and registered - which also insures it's up to date on vaccinations. 

I don't breed restrict. There is no such thing as an aggressive breed, only jerk humans that make dogs mean. Make sure to meet the dog. I also require renters insurance - at the tenants cost. There are insurance companies out there that cover ALL breeds. 

DM me for more about the policies and processes I use for accepting pets

[Michael Noto]

@Stephanie Jamgochian Tell them politely there will be no rent increase or decrease, it will stay the same. If you decide to allow the pet make sure to collect a non refundable deposit. 

[Tim Houzenga]

@Stephanie Jamgochian

I’d let them get a pet. There is a lot less risk when you have had time to develop a relationship with the tenant. No deposit if you foresee them staying in the property for several years. Turnover is a huge expense.

However, I would not reduce the rent. I think they are anchoring low and seeing where you stand and your thought process. I think they are as logical as you are practical. Good luck!

[Ryan Dossey]

Pet deposit of $200 + $25 a month in rent increase. I would simply explain that your property is priced competitively and you won't be reducing rent. 

[Stephanie Jamgochian]

Thanks everyone for your feedback! I truly appreciate your insight as seasoned property managers/owners. It's given me clarity on the situation.  Here's where I ended up: no rent reduction and okay'd a dog under 30lbs, already housebroken, with a $500 pet deposit (cannot charge extra pet rent in CA which is illegal).  The house has vinyl flooring throughout so there is no carpet to contend with.  My renters said they were "happy" to stay, especially after I explained what a great deal they're getting!

[Greg M.]

Originally posted by @Stephanie Jamgochian:

Here's where I ended up: no rent reduction and okay'd a dog under 30lbs, already housebroken, with a $500 pet deposit (cannot charge extra pet rent in CA which is illegal). 

Since when? I can't find a single source that says pet rent in CA is illegal. It is possible that it is illegal in some cities, but nothing popped up when I searched. The only caution against it is that if the unit is under rent control, any added pet rent cannot bring the total rent increase above the amount allowed under rent control.

[Tashsa Holmes]

Say no to decrease and if they move out so be it. Not sure how you'd feel but if l said yes it would irritate me so much everyday after. I can't stand someone bartering the price with me, complete turn off. The price is the price.  As for dog depends on how much you wanted no pets.  

[David Nino]

@Stephanie Jamgochian. I would meet them halfway. No rent reduction but a dog is allowed for a pet FEE.

[Eric Carr]

Originally posted by @Stephanie Jamgochian:

Thanks everyone for your feedback! I truly appreciate your insight as seasoned property managers/owners. It's given me clarity on the situation.  Here's where I ended up: no rent reduction and okay'd a dog under 30lbs, already housebroken, with a $500 pet deposit (cannot charge extra pet rent in CA which is illegal).  The house has vinyl flooring throughout so there is no carpet to contend with.  My renters said they were "happy" to stay, especially after I explained what a great deal they're getting!

 I think you made the right decision based on what you had said in you OP. It's also what I might have done. 

I haven't seen anything about CA weighing in on pet rent, I expect it at some point, but certainly it is illegal to charge a non-refundable deposit. 

You have solid tenants, who will hopefully rescue, and will hopefully stay for years to come - with appropriate rent increases of course. Turn over costs are owners biggest costs on average. There might come a time where you are seeing considerable demand in the area, and that might be the time for less concessions as far as rental rate goes. But for now, good work

[Stephanie Jamgochian]

@Eric Carr yes, you are correct and I was mistaken! I cannot charge a non refundable pet deposit, but pet rent ok in CA.  Yes, because it's a house in a HCOL area, turn over costs can be significant, so trying to mitigate this.  So far, so good.  

[Brit Hale]

@Stephanie Jamgochian “Thank you, no.”