How pets can be a landlord's best friend (© SuperStock)

As landlords vie for tenants in this depressed market, many are wondering whether it might be time to allow dogs and cats. Judging by the number of calls they get from pet owners, surely there'd be plenty of takers.

But when the plan is posed to colleagues, say, at an online property-management forum, it invariably gets quashed by a colorful tale of hurt: the kitty litter improperly disposed of (clogged pipes) or the whining dog inadequately attended to (infuriated neighbors). "After that," a fellow property owner declares, "I stopped allowing pets."

The problem is that what makes for a good story and what constitutes the norm are two very different things. When managers hear only the most outrageous tales – and what else are people going to recount? – they miss the true picture, which is far less interesting and far tamer.

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"Those stories get passed around and pets get a bad rap, when on average it doesn't seem to be the case from our data that people with pets cause more damage," says Josh Frank, co-founder of the Foundation for Interdisciplinary Research and Education Promoting Animal Welfare (FIREPAW). "And even in cases when they do cause damage, it's less than any pet deposit, so it's not an amount that affects the profitability."

In what may be the only published research on the subject, a 2003 survey (.PDF file) by FIREPAW found that apartments that accepted pets not only didn't lose money, they actually gained more, to the tune of nearly $3,000 per apartment, per year. Property managers with active pet policies concur. Where do those gains come from? Take a look:

Faster unit turnover
While there don't appear to be any data comparing current vacancy rates between pet-friendly and non-pet-friendly apartments, the 2003 survey found vacancy rates of 10% and 14%, respectively. That 4% difference translates into one of every 25 units sitting empty when pets aren't allowed.

"Somewhere in the neighborhood of 70% of your tenants are going to have some kind of pet, so you can't just say, 'No pets allowed,'" says Fred Thompson, president of the National Association of Residential Property Managers, a trade group. "If you do, you're going to see an extended vacancy period on your investment and that doesn't work out long term.

"Look at it in this sense: If it took an extra two months at $1,000, then … not taking a pet costs $2,000," Thompson says. "Well, $2,000 will pay for a lot of carpet."

Pet-friendly apartments rented in 19 days versus 29 days for non-pet-friendly units in the 2003 study, when 9% of apartments surveyed allowed all pets, 44% limited pets by type or size (most allowed cats) and only 11% allowed large dogs.

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Today, due to an oversupply of condo conversions and a depleted supply of employed renters, the vacancy rate has spiked above 10% nationally and topped 20% in some areas, according to U.S. Census Bureau data.

"Lots of people are struggling to rent out homes, and if they can get a dog in there, they can rent it out for sure," says Amanda Carey, a real-estate agent in Florida. "There's a real pent-up demand for rentals with dogs."

A bigger pool of tenants
In good times and bad, allowing pets draws a wider selection of renters.

"When you have higher demand, you can be more selective and you can actually get better tenants if you allow pets," says Frank, an economist and consultant to landlords on effective pet policy.

Reduced turnover rates
In the FIREPAW survey, tenants in pet-friendly rentals stayed an average of 46 months, compared with 18 months for those in rentals prohibiting pets. This did not include tenants who harbored pets illegally, who also stayed only 18 months.

Tenants who cause less damage
The average worst damage from tenants with pets, as reported by landlords in the FIREPAW survey, was $430, an amount typically covered by the security deposit.

The average damage was $362 for tenants with pets, and $323 for tenants without pets, a difference of about $40 and one that Frank says is statistically insignificant, meaning it could be due to random variables.

And even those differences were skewed once children were factored in: Overall, tenants with children caused $150 more damage than those without. After controlling for children, the pet owners actually did less damage than those who didn’t own pets.

Tenants with children and pets caused $4 less damage than tenants with children and no pets; and tenants with no children who had pets caused $25 less damage than those with no children and no pets.

"In terms of damage, I don't think it's any more than what a tenant is going to do without a pet," says Barbara Holland, president of H&L Realty and Management in Nevada.

No one is suggesting that landlords discriminate against children; besides, it's against the law. But consider that if you do automatically turn away the older couple with the golden retriever, you might have to take the family with the two-legged companions that arrive next, along with the possibility of greater damage.

Higher rent
This is Economics 101: Increased demand raises prices. Apartments that allowed for pets were able to charge 20% to 30% more rent than those that didn't allow pets ($222 on average, according to the FIREPAW survey. And those that allowed all pets (typically meaning large dogs) fetched $100 more per month than those that restricted pets by size and type.

"I don't recommend anyone just charge more because they allow pets, but you end up charging more just because you have more demand," Frank says.

Less time and money spent on advertising
In the 2003 survey, owners spent $15 in advertising per unit for pet-friendly housing compared with $32 per unit for non-pet-friendly housing. They also reduced their marketing time by half.

Pet-friendly buildings can reach renters via rental sites tailored for pet owners, and the free listings at shelters, dog-owners groups, pet stores and veterinary offices.

After subtracting for extra costs, such as insurance, the FIREPAW survey found that the apartments that allowed pets were able to generate, on average, $2,300 more per unit, per year.

Mitch Rattner, owner of Home Equity Savers, near Chicago, changed to a pets-OK policy when the market slowed in 2006. It's been easier to rent units, he says, and "most people are conscientious." He could recall only one case of damage costing more than the $400 pet security deposit.

"It's part of the business. If you plan ahead then it's not an unexpected expense and you're not upset," he says, and jokes: "If people are too worked up about it, tell them not to go into the real-estate business. Tell them to go into the carpet-cleaning business."