If there is one thing that experienced landlords know, it's this: If one is not paying attention, there are a whole lot of ways to lose money in the rental industry.
But there is one specific area of revenue that is often overlooked, and the funny thing is…it's hiding in plain sight. Here's why your tenant is hiding this one thing from you, how it's costing you money, and what you can do to find it and cut your losses.
The Statistics You Need to Know
Here is what tenants are hiding from you: PETS.
And there are some pretty incredible statistics about pet ownership in the United States:
"Sixty-eight percent of U.S. households, or about 85 million families, own a pet, according to the 2017-2018 National Pet Owners Survey conducted by the American Pet Products Association (APPA). This is up from 56 percent of U.S. households in 1988, the first year the survey was conducted." - Insurance Information Institute
And according to an Apartments.com survey in 2014, only 43% of renters surveyed said they owned a pet. Just a few years later, in 2017, that number jumped to 72%!
Here are two more extremely relevant notes on the topic of pet ownership:
Sitting at an impressive 35%, Gen Y (Millennials) has now passed the Baby Boomer generation as the generation with the largest percentage of pet owners, according to the APPA's National Pet Owners Survey.
According to the Pew Research Center, Gen Y (Millennials) also happens to be the largest generational bloc of renters in the United States.
The last time I checked, 1+1=2.
To be fair, not all tenants are intentionally hiding anything from you. For some, it's because they are genuinely not aware of what your lease requirements are when it comes to animals. Some move in without a pet and end up buying their first pet later on. "Pet deposit? What's that?"
According to this FirePaw, Inc nationwide research study, 20% of the tenants who own pets reported that they were keeping their pets in the rental illegally.
What percentage of your tenants have reported pets on file?
Lost Deposits, Fees, & Recurring Rental Revenue
When a tenant has an unreported pet living in your rental, you are losing out on pet deposits, pet fees, and recurring pet rent revenue. This could potentially be costing you thousands of dollars in losses each year for every unreported pet.
Many landlords charge pet deposits + initial one-time pet fees + recurring pet rent charges as a part of their lease. Initial non-refundable pet fees can range from $25 - $500, and recurring pet rents often range from $10 - $50 per month per pet.
What are some other ways that you lose money due to pets?
Well, one way they can cost you money according to the National Fire Protection Association is that animals are responsible for over 700+ house fires in the United States per year.
That escalated quickly.
Let's Get Specific About Your Actual Losses
Here are some statistics according to FirePaw, Inc.'s nationwide research study:
A landlord can net as much as $2,731 in added revenue per unit due to reduced vacancy, reduced advertising costs, and an increase in fees and recurring rent amounts.
Approximately 50% of landlords surveyed who allow pets stated they have never had pet damages in their rental.
Interesting Survey Results About Reductions in Vacancy Rates for Pet-Friendly Rentals:
On average, tenants who own pets often stay in the same rental for an average of 48 months.
Tenants who do not own pets only stay in the same rental for an average of 18 months.
Vacant pet-friendly units were leased on average in 19 days, while non-pet friendly units were leased in 29 days.
Who wouldn't like those occupancy rates?
Increase Your Bottom Line
Now the question is, "How can I make sure that I'm taking advantage of this incredible opportunity to significantly increase my bottom line?".
I'm so glad you asked that!
Here are a few tips:
Since we know at least 20% of tenants are hiding their pets from their landlord, it's important to conduct "Pet Audits/Inspections" at your rental property, just like you would any other audit or inspection.
Make sure that you provide a designated area for applicants to fill out pet information on your rental application. This can be done using TenantCloud's customizable online application.
Make sure that your lease is bulletproof when it comes to pet criteria, requirements, and costs associated with having a pet at your property.
Verify that your insurance policy has coverage included for allowing pets. If not, add it.
Require your tenants to have renters insurance with pet coverage included, in the event that their pet causes damages to your rental.
Provide a move-in packet to your tenants who move in without pets that includes a fun pet-related document that outlines their responsibility to notify the landlord if they purchase a pet, pet-sit a friend or relative’s pet for any length of time, etc.
BONUS POINTS: Because many tenants acquire pets through local shelters, you can partner with shelters near your property and negotiate some discounts for your tenants.
Pet ownership among renters is trending upward.
That trend is largely influenced by Gen Y (Millennials) who are both the largest renter bloc by generation, as well as the largest generational group of pet owners.
Intentionally or otherwise, some tenants are keeping pets in their rental without reporting them to you.
One way or another, unreported pets in your rentals are potentially costing you thousands of dollars per year.
Even if you don't allow pets, there's a good chance they live there anyway, so you may as well allow them and benefit financially.
You can find unreported pets by simply doing a "Pet Audit/Inspection" in your rental(s).
Make sure your renters are required to have renters insurance.