Pet fees monthly or 1 time fee?

[Nick Troutman]

Does anyone charge monthly or annually for pets? My PM’s contract says a 1x fee for pets and I’m wondering about possibly charging more though I’m not sure if that’s standard or what?

[Nathan Gesner]

Refusing pets doesn't make sense because it eliminates half the renter population, possibly more.

Everything you do involves risk. A dog could pee on carpet or scratch up the door, but a 5-year-old boy can cause just as much damage and we're not allowed to discriminate against them!

As an investor, you should identify risk and then find ways to mitigate them. In some cases, that may be an outright ban on animals. For example, I don't allow pets in my apartment complex because the barking would be too much, there's shared common space which increases the risk of messes or barking or biting, and there's no place for them to relieve themselves.

I try to allow animals in every other property and turn it into a revenue center. A couple steps I practice:

1. Screen the animals! I want to know that the renter has owned the animal for at least one year. No puppies, no rescue animals. The first year of ownership is when an animal is most likely to cause damage because they aren't grown, settled, or trained.

2. Screen the tenant! The higher-risk the tenant, the more likely they are to have an ill-behaved animal. The 21-year-old with a rottweiler is far more likely to cause damage than the 63-year-old woman with a Chihuahua or the family of five with a Cocker Spaniel.

3. Make them pay! You should have a way of identifying the higher-risk tenants and pets and then charge them accordingly. You can charge an increased deposit, a non-refundable "pet placement fee" up front, and/or a monthly rent increase.

4. Deposits are refundable, fees are not! Charging an increased deposit may not be legal in your state and I don't recommend it because it's not a profit center. You should be charging "fees" which are yours to keep. I prefer an up-front fee at move-in based on the level of risk and then a monthly rent increase. The amounts really depend on your tolerance level and the market. I've seen some people charge as much as $500 up front and $300 monthly for one dog (and the tenant paid it!) but I prefer to keep it somewhat reasonable. $100 - $300 depending on the risk identified up front and $50 - $100 based on the risk presented by the animal. The up-front fee is per lease but the monthly rent increase is per animal. So two dogs may be $200 up front and a rent increase of $100 ($50 per dog).

5. I do not reduce rent if the animal is removed. Tenants will often remove an animal (or it dies) and ask for a reduction in the monthly rent. However, the increased rent was to offset the risk of damage caused by the animal and the animal may have already caused the damage. I keep the increase in place for the remainder of the lease and will reduce it only after the lease is fulfilled and we negotiate a new rental agreement.

6. Do the math. One animal in a two-bedroom apartment can easily cause $2,000 in damages from torn/stained carpet, scratched doors, chewed trim, etc. $100 a month for 12 months is only $1,200. You have to estimate what damage could be caused and how much you would need to offset that risk.

In most cases, my renters take responsibility for their animals and there aren't any problems. This means the extra charges result in extra profit and it's easy to absorb a loss when I do have a bad renter.