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Property Management Blog

New Pet Damage Guarantee Program

Todd Ortscheid - Monday, July 30, 2018


Video Transcript:

Hi, Todd Ortscheid here with GTL Real Estate. This week I'm going to talk about a new program that we have that's going to be for all of our clients called the Pet Damage Guarantee Program. Basically what this program will do is it will eliminate the problem that so many of our clients have of worrying about pets from their renters causing damage to their properties, and we'll get into, in a few minutes here, how exactly we're going to do that.

First thing I wanted to do was talk about why it's important to allow tenants to have pets, because this is a common question we have. We have so many of our clients right now who aren't allowing pets in their properties and it's really costing them a lot, and I'll explain that here in a second, but eliminating that worry about pet damage, we think, will make sure that every landlord is able to offer their property available for pets, which should eliminate some of these problems. 

So, what are some of the problems that are created when you don't want to allow pets in your rental property? The first thing is about half of all tenants have pets. Some studies say a little bit more than half, but we're basically looking at at least half of tenants have some sort of pet, whether it's a dog or a cat, a parrot whatever it may be. Pretty much everybody has a dog or a cat in that group, but not necessarily. So it's about half of the available tenant pool. So when you have your property listed for rent, half of the people out there that might be interested in renting your property have pets. So if you advertise that the property isn't available for people with pets, basically you're eliminating half of the available people that you could place in that property. And we already turn away about two thirds of the people who apply to rent properties, because of their credit score or eviction history or whatever the case may be. That means if you're eliminating half of the remaining people you're down to a very small group of people who could actually rent your property. 

This is why, for those of you who don't allow pets in your properties, this is why you see they usually stay on the market longer. We usually tell people that our average rental time is about two weeks, 14 days, and that's true as an average, but the people who allow pets usually see their properties rent much more quickly because there's just a much bigger group of people that they are able to rent to. So, allowing pets at your property is a very important thing to getting it rented as quickly as possible and to the best tenant possible. 

The other issue is keeping tenants, which as we talk about on these videos all the time. Reducing tenant turnover is the most important thing you can do to reduce your cost and to maximize your profits. So you want to make sure your tenants stay. So how does that apply to pets? Well, think for a second. You place a tenant in a property, they don't have any pets. They've got a small child, that child starts to grow up. She wants a dog. So, now the family wants to get a dog but their landlord doesn't allow pets. So what that tenant's going to do is they're going to put in their notice to vacate. They're going to move and they're going to go to a property that allows pets. So even once you get tenants in your property after you've had a difficult time finding one that doesn't have a pet, then they're going to later leave because now they want to get a pet. So that's a problem as far as keeping your turnover down, which is the main way for you to maximize your profits in this business. So that's another reason that you want to make sure that you allow pets in your property. 

Finally, it's bordering on a fair housing issue. When you tell a certain group of people that they're allowed to have pets and another group of people that they're not you're opening yourself up to liability risk. Even when it's not discriminatory in any way, when it's just based on what the landlord wants in their property as far as these landlords allow pets, these landlords don't. When you have a tenant that comes through and says, "Well I see that you rented this property over here to these people and they were allowed to have pets, but the same company, GTL, is renting out this property over here and I have pets and they're telling me I'm not allowed to have pets". 

So that creates a perception problem where someone could feel that they're being discriminated against even if that's not what's going on, so that always creates a liability problem because even if you're not discriminating you can still get law suits from people claiming that you are. So the fewer things that you're doing where you're having different rules for different tenants, we harp on this a lot in these videos is making sure we have the same rules across the board for every tenant. So that's another important reason to just allow pets in every property to avoid those sorts of problems. 

So how are we going to deal with this? We're going to guarantee your property against damage. So what we're going to do is we're going to say that up to $3,000 worth of damage if that damage is caused by a pet, we will cover that out of our own money at GTL. So basically we will go out and we will get our vendor to fix that damage whether it's chewed up trim work around the doors or windows. It could be damaged floors, torn up linoleum, whatever it may be we would get that fixed up to a maximum of $3,000. And we've never seen damage anywhere approaching $3,000 from a pet so at $3,000 you could even replace a lot of carpet. There's a lot of things you can do with that sort of coverage. So, we'll guarantee no damage from pets up to that $3,000 limit. We'll get that fixed if that happens. 

So you're probably asking, "Well how can you do this"? And the way we're going to do that, right now we charge tenants pet rent and that pet rent goes to you as the landlord. What we've heard from a lot of you, this doesn't make you feel better. The $25 a month that you get from a cat and then that cat urinates all over the carpet and the carpet has to be replaced, that $500 that you got over two years, excuse me $600 you got over two years just isn't enough to cover fixing that damage. So you know, that pet rent isn't really making you feel any better about allowing pets in your property. So what we'll do is we can pool all of that money, since we have so many properties with so many pets. We can charge that pet rent. The pet rent goes to us to pool altogether so we can have a big group of money to use for those rare, but they come up, big repairs from pets. So if there is one property that has $2,000 worth of carpet that needs to be replaced that individual land lord wouldn't have received enough pet rent to cover that. But if the pet rent is coming to GTL Real Estate and we're pooling all that money together then all the good pets they don't have any damage so that's going to help cover all the properties that do have the damage. 

So, basically you're just losing the $25 a month pet rent, that will go to us so that we can provide the guarantee against damage to your property. We think most owners will be much happier with that because most of the people we spoke to they didn't really think the $25 a month in pet rent was really helping them that much. That didn't make people decide to rent their property to people with pets. That didn't make them feel more confident that they didn't have to worry about pet damage. So we think doing it this way will make it a lot better and now you have that guarantee that if there is damage we'll just pay to fix it. 

Now there are a couple of exceptions to how this works. Service animals, emotional support animals, therapy animals, things like seeing eye dogs, dogs to help people with Post Traumatic Stress Disorder. Those are covered under federal law. They're protected under fair housing laws so you're not allowed to charge admin fees, pet rent, any of that sort of thing for people that have those kind of service animals. So they aren't considered pets. Actually, under the law they are considered service animals, or emotional support animals, or there's different names for them depending on what function they serve, but they're not pets. So we can't consider them a pet, and generally they're very well behaved animals anyways, so you don't have to worry about them causing damage. But they would not be something that would be covered under the program because we can't collect any money for those animals. Just like right now if you have a pet, or excuse me, an animal that's in one of your rental properties that is a service animal you're not getting any pet rent for that right now either. Just because it's illegal to do that. 

So, obviously those situations if someone has a service animal that's not part of the program because that's not considered a pet. But again, the odds of that service animal actually causing damage to your property anyway are nil. It's next to nothing. 

Also, unapproved pets. If a tenant is not approved to have a pet in the property and they haven't been paying pet rent then obviously if that dog or cat or whatever it was, was brought in by the tenant without approval and caused damage that wouldn't be covered, of course, because we hadn't been collecting the pet fees for that. However, what we're going to do in that case is right now we charge the tenant what's called liquidated damages, which means they pay a fixed $250 if we catch them with an unapproved pet. 

The way we're going to change that is we're going to make it where instead of just that fixed $250, they're going to have to pay everything they would have paid if they had told us about the pet from the beginning of their lease. So if they've been in the property for 12 months, and it's a pet that we determine is a high risk pet that we might charge a higher pet rent on, then they might have to pay $700 once we catch them with that unapproved animal. Including their upfront fee and their monthly fees. So it's to their benefit to let us know ahead of time otherwise they're going to get this big bill that's going to come all due all at once. So that way we'll make sure that no matter what, we're getting that money so that we're able to provide you that guarantee against damage and there's no incentive for the tenant to try to hide the pet. They're gonna have to pay one way or another. They're either going to pay monthly or they're going to pay when we do the inspection and we catch them with the unapproved pet. So we'll make sure that that doesn't happen anymore. Where we don't have to worry about unapproved pets. 

So basically when we go live with this, we're going to go live with this next week. Basically at the beginning of August 2018 we're going to roll every property into this so every property will become a pets available property, because no owner has to worry about pet damage anymore. It's all guaranteed by us so there's no reason for anybody to worry about their property being damaged. So we'll activate every property as a pet available property. That'll make sure you can get your property rented as quickly as possible. Make sure you keep your tenants and avoid any sort of liability problems. Any sort of accusations of not treating people fairly. And you'll also get the benefit of that $3,000 pet guarantee in case there actually is any damage to your property. We'll return it back to its original condition. 

So if you have any questions about the new program or want to comment on it, please send us an email at support@GTLrealestate.com but we think everybody's going to be very happy with the new program, but if you have any questions just let us know. Thanks!


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