Hi, there! Joe White here from Grow Property Management, your trusted property management company in Philadelphia.
John reached out with a question about whether or not to allow pets in his rental properties. He’s concerned that it might be too risky, and he wants our opinion on it. I don’t think he fully understands the numbers, and I definitely disagree with his stance on this one. My property management company, Grow Property Management, works with many different owners, and I don’t think they always realize how important vacancy costs are. We have a deep understanding of the financial side of things, especially when it comes to vacancy rates, which I think a lot of owners overlook.
The way I see it, vacancy is a major expense for landlords. We refer to it as a “vacancy penalty fee,” and it’s a per-day cost that owners pay when their property sits vacant. For example, if the rent is $1,000 a month, we divide that by 30 days in a month, which gives us a daily vacancy penalty of about $33. So, if a property is vacant for a day, that’s an immediate $33 cost. For the average rental price in Philadelphia, our owners are facing around $78 per day in vacancy costs. This adds up quickly, and it’s our job to make sure we fill properties as fast as possible.
Now, the numbers show that 67.5% of potential tenants either have pets or plan on getting one. That’s a huge portion of the market. So, if you’re not accepting pets, you’re essentially cutting out two-thirds of the people who are looking for a place to rent. This leads to longer vacancy periods, which directly increases your costs. If you refuse to accept pets, you could be facing up to a 40% increase in your vacancy costs. That’s a significant amount when you think about it. Let’s say you’re losing 34% more days in vacancy time, at $78 per day—that adds up to a lot of money.
At Grow Property Management, we manage a large number of properties, so we have a pretty solid grasp of the numbers. If we manage 100 properties, we know how often we’ll encounter things like pet damage. And the truth is, pet damage is extremely rare. In my experience, it’s something we almost never see. Sure, once in a while a dog might chew on some trim, but it’s not going to cost $500 to fix. In fact, in most cases, the tenant’s security deposit covers these types of minor repairs. And with a deposit of $2,100, you’re more than covered for any small damages that might come up. Even in the rare case of significant damage, the deposit is almost always enough to cover the cost of repairs.
For example, I had one instance where three roommates caused significant damage when one of them removed a window to get a box spring out. The window was broken, and we had to replace it. But even though it was a big issue from the owner’s perspective, it wasn’t as catastrophic as it seemed. We were able to charge the full cost of the window replacement to the tenants and still had enough left over to return around $300 of the security deposit. In the end, it didn’t really cost the owner much at all. The same applies to pet damage—it’s a very rare occurrence, and when it does happen, the security deposit is more than sufficient to cover the repair costs.
In fact, in all the properties I manage, I can’t even remember a time when pet damage exceeded $3,000 in cost. And when you factor in vacancy costs, it’s easy to see that accepting pets is a risk worth taking. If you’re losing out on 67.5% of the potential tenant pool by not accepting pets, you’re risking far more in vacancy fees than you would if you just allowed pets.
So, my advice to John and to any other landlords out there is simple: allow pets. It’s not the huge risk that many owners believe it is. The cost of pet damage is minimal in comparison to the money you’ll save by reducing vacancy periods. And in the rare case that something does go wrong, the security deposit will cover it. In my experience, the benefits of accepting pets far outweigh the potential downsides.
As always, this is just my humble perspective as a property management company owner in Philadelphia, doing my best to provide solid advice to fellow real estate investors. The numbers don’t lie- accepting pets is a smart move that will save you money in the long run.
Happy real estate investing!
