Should you allow pets in your rental property? You don’t have to be an animal lover in order to see the benefits.
With over half of millennials owning pets, pet-friendly rentals are in high demand. That means fewer vacancies and more long-term tenants. It also means that landlords can charge more.
Most landlords charge either a pet fee, pet deposit, or pet rent in order to give themselves financial protection against pet-related damages. These fee structures have some differences and are not always mutually exclusive.
When considering which type of fee structure to implement, keep in mind that these pet-related charges do not apply to service and emotional support animals. These animals are not considered pets under the law, and landlords must not turn away qualified applicants solely due to their animal.
As the term implies, a pet deposit is completely refundable, provided there is no pet-related damage to the property. The deposit amount commonly ranges from $200-$500 per pet.
This deposit is collected along with the security deposit before tenancy begins. While some landlords separate out the security deposit and pet deposit, it’s better to lump these two deposits together if possible. In some states, if the pet-related damage exceeds the amount of pet deposit, the landlord may not withdraw funds from the security deposit to cover the excess damage. Having a single deposit prevents this situation from occurring, since the landlord is able to use the deposit for any damage (pet-related or otherwise).
In all cases, it’s important to make sure you follow your state’s law for how much you can charge for pet and security deposits. For example, California puts a 2 month maximum limit for security deposits if the unit is unfurnished. This limit includes any pet deposits as well.
If the landlord plans to deduct money from the pet deposit, then they should send the tenant an itemized list of deductions, similar to the security deposit.
A pet fee is an upfront charge for the tenant to bring their pet with them onto the rental property. Unlike a pet deposit, pet fees are non-refundable. Pet fees commonly range from $100-$400 per pet and are kept regardless of whether or not any pet-related damage occurs.
Pet fees are not legal in every state. For example, California does not allow non-refundable fees with the exception of late fees and application fees. For this reason, most California landlords who allow pets choose to charge a pet deposit and/or pet rent.
Pet rent is a monthly recurring fee that landlords charge regardless of damage. It usually ranges from $20-$75 a month per pet and is non-refundable. Similar to a pet fee, pet rent is simply the price of admission for pets in the rental property. However, the recurring nature of pet rent means it is not seen as a non-refundable fee, and is therefore legal in California.
Pet rent tends to be more common at large apartment complexes. It can be a way to add extra income to a landlord’s monthly cash flow, since it does not need to be returned to the renter.
Application: What should you charge for pets?
Pet deposits, pet fees, and pet rent all have a slightly different structure, but each type of charge is designed to cover pet-related damages and give the landlord extra income in exchange for allowing pets.
To decide what type of fee structure you should implement, research similar rental properties in your area and see what type of charge is the most common.
For example, some rental properties charge a low pet deposit, while others may charge a higher deposit on top of pet rent. It depends on your area, renter demand, and the supply of pet-friendly housing.
For example, if there aren’t many pet-friendly rentals in your area, renters with pets will have fewer options. Therefore, they may be willing to pay more to accommodate their pets, which means you could charge a higher deposit, fee, and/or pet rent.
If, however, your area has a large number of pet-friendly rentals in addition to high vacancy rates, you may want to consider a lower fee or deposit. Since renters will have more options, charging less up front gives them more incentive to choose your property.
The amount you should charge will vary depending on the pet. Landlords generally charge less for cats than they do for dogs, although both animals have the potential to cause damage. Larger dogs may require a higher charge than smaller dogs. For caged animals and fish, some landlords do not charge fees at all, while others may charge a small deposit or a nominal amount of pet rent. Specific amounts are location dependent and will be affected by vacancy rates and renter demand.
In all cases, remember that none of this applies to service animals or emotional support animals. While landlords can deduct animal-related damage from the security deposit, they cannot charge additional fees, deposits, or rent for service or emotional support animals.
Landlords who accept pets increase their chances of having long-term tenants. Accepting pets also gives you an edge over the competition, as more renters have pets than not. To prevent damage to your property and to increase your cash flow, research your area to find the type of pet-related charge that will work best for you.