One of the most common questions when a prospective resident contacts our office is “do you allow pets”? Many property management companies and landlords will not allow pets at all, others have size restrictions and still others will have restrictions against certain breeds of animals. Our company falls into the third category.
It has been my experience that a Great Dane can be an outstanding inside house pet. On the other hand, a small ferret can destroy parts of a home. With that being said, almost any pet can do damage to a house, size makes little difference.
Given the potential repairs due to animal damage, why would a landlord allow pets on the property in the first place? The bottom line is: the market demands it. Studies show that more than 60% of American households are pet owners. Using some of my own extrapolation with these numbers, someone who wants a single family home is much more likely to have a pet then someone desiring to live in an apartment or a condominium. Furthermore, I believe that Tennesseans are even more likely to own pets then the average American. Given all of that, a landlord restricting a rental home from pets could eliminate up to 80% of the tenant pool. This translates into significantly lower rents and longer vacancy periods, ultimately costing the landlord thousands of dollars.
I really don’t like pets in my properties any more than other landlords, but the numbers tell us that they are worth accepting. There is value in allowing pets. It simply becomes part of the risk in owning rental properties.
In my opinion, there are some animals that are not worth accepting. This is more about the liability then the potential damage to the home. Our office will not accept animals (typically dogs) that are either naturally aggressive or are commonly trained to be aggressive. I know there are differences of opinion as to what animal is aggressive and what animal is not. Ultimately the decision is based on how much liability an owner is willing to expose themselves to.
Dogs such as chows and pit bulls (also known as American Staffordshire terrier) are commonly known to be naturally aggressive and are not allowed in our homes. However, Yorkshire terrier’s and Chihuahua’s are also naturally aggressive and are allowed as pets in our rental properties. So why do we not ban them? It this case, size does matter. A pit bull or chow are large, very strong, dogs capable of doing a lot of physical damage to a person, especially a small child. Smaller dogs are not nearly as much liability.
Rottweiler’s and Doberman Pincher’s are naturally relatively passive animals. The problem with them is, along with shepherds, they are commonly trained to be protective. Again, given the size of these animals, they are capable of doing great bodily harm.
There are countless legal cases where a landlord has been held responsible for injuries caused by their tenant’s animals. Many of these judgments have exceeded the amount of insurance the landlord is carrying on the property. Therefore, it is prudent for a landlord and/or property manager to do everything they can to keep these animals off their properties.
I know that many of our banned animals, as individual pets, are very good companions, many of which would not hurt a fly. Unfortunately, a line must be drawn somewhere and that line is dictated by the liability risk stemming from specific breeds.
Scott Abernathy, MPM, RMP, GRI
Why Real Estate
What do the names Brad Kelley, Herbert Simon and Jorge Perez mean to you? No, they are not famous actors, congressmen or presidential candidates…at least as far as I know. All three of these men are on The Forbes 400, The Richest People in America list. Why is that special to us real estate investors (or potential real estate investors)? They are three of 26 people on The Forbes 400 list who earned their fortunes in real estate. That represents about seven percent of the entire list!
This is not the highest percentage on the list, other industries, such as technology, food and beverage and especially investments have more, but most of them require a specialized education, specific skill set and/or significant monetary outlay to get into the industry. With real estate, anyone can do it. This is not rocket science, however there are no people on the list that earned their fortune as a rocket scientist, but you get the point.
Real estate is not for the ignorant either. You need to have good negotiating and management skills and it does not hurt to know a little about construction. A good head for math is helpful as well.
Investing in real estate does take a little money; after all it is called “investing”. Relatively speaking, it does not take much. The beauty of a real estate investment is the power of leverage. You can purchase income producing properties using other people’s money (OPM) for as little as a 20 percent down payment and if you get real creative it can be acquired for nothing down, but that is very rare in this market.
Using the incredible power of OPM, your initial investment can compound exponentially, maybe eventually you could even end up on The Forbes 400 list yourself. If that is your goal remember, you cannot think small. However, even for us small investors, real estate investment can lead to a very comfortable net worth.
One caution on OPM, leverage also increases the risk in real estate. We will discuss that in a future blog.
Scott Abernathy, MPM, RMP, GRI
Areas We Service
- Bell Buckle
- Beech Grove
- La Vergne
- Rock Island