As a landlord, allowing your tenant to keep a pet in your investment property can add a level of complexity to your property management duties. On one hand, there is the matter of what to charge. Some landlords charge a pet deposit while others charge a pet fee, and some charge a monthly amount of pet rent. Keep reading to learn the difference between these three options and how to determine what type of charge works best for you.
What is a pet deposit?
At its core, a pet deposit is a one-time fee that's meant to protect the landlord against any damages created by the pet. In practical terms, this fee functions a lot like a security deposit. It's usually collected up front when the tenant moves into the unit and it may or may not be refundable.
If you choose to go this route, it will likely have to be handled in the same manner as the tenant's security deposit. In the event that there are damages to the unit that were clearly caused by the pet, you may be able to deduct from the deposit to cover the repairs. However, you should be prepared to provide an itemized list of your reasoning along with the return of your tenant’s other deposits.
What is a pet fee?
A pet fee is a nonrefundable charge the tenant must pay for the privilege of keeping an animal in the unit. In this case, since the fee doesn't need to be returned, you should be free to use the funds in any way you see fit.
However, bear in mind that a pet fee is a one-time charge, so when you're setting the amount, you want to make sure that you collect enough to cover any damages that may occur.
What is pet rent?
Lastly, as the name suggests, pet rent is a recurring charge added on to your tenant’s monthly rent in exchange for the privilege of being able to keep a pet in the property. When setting this fee, it’s important to make sure it remains reasonable, because if you artificially inflate the value of the property too much, potential tenants may start to look for other, more affordable options.
That said, charging pet rent could end up being your most lucrative option. For example, a pet fee charge of $50 per month is equal to as much as $600 per year. You’ll also be entitled to this charge for every year the tenant decides to keep a pet in the unit, as opposed to the other two options above, which are both one-time charges.
How to determine what to charge
Like many landlord-tenant issues, what you’re able to charge will ultimately depend on the laws in your state. While many states don't have any specific statutes on the books, if your state does, you'll be obligated to adhere to it.
For example, in Delaware, additional pet deposits beyond the security deposit are allowed. However, they may not exceed more than one month's rent in value. In Montana, on the other hand, nonrefundable fees are not allowed.
Once you know what’s allowed in your state, it can be helpful to do some research into what fees are currently being charged in your area. After all, while it is important to be protected in the event of pet damage, you still want your listing to stay competitive.
All that said, it’s important to note that charging for a pet is distinctly different than doing so for a service dog or emotional support animal. Assistance animals are protected under the Fair Housing Act, and charging for them is not allowed.
The bottom line
On the whole, as long as you’re adhering to state law, the choice between whether to charge a pet deposit, pet fee, or pet rent is largely one of personal preference. While pet rent may bring the most substantial returns, a pet fee does give you up-front reassurance that you’ll be protected in the event your unit is damaged. With that in mind, you’ll need to make the decision that makes the most sense for you.