By Frank Newman on 11th August 2016
The August issue of the NZ Property magazine has an interesting story about a couple who are pet loving property investors. They have combined both interests to establish a lucrative niche in their local rental market.
In the last three years they have expanded their rental portfolio from three to 14 properties, by offering pet friendly accommodation. They live in Christchurch. After the earthquakes they found high demand from pet owning families looking for property to rent while their house was being repaired due to earthquake damage. They consciously set out to meet that demand.
The niche suited them perfectly because they love pets and could relate to needs of their tenants. They also found having this empathy with their tenants made the landlord-tenant relationship much stronger, and it was more satisfying for them and the tenant.
And the arrangement was good economics too. According to a NZ Herald article published in May, real estate experts say landlords could receive about $20 more a week for a pet-friendly rental, and renters with pets also tend to stay longer – on average seven months longer. That’s good for landlords because it means more stable tenants, and less down time between tenants. It’s a win-win situation – which is what good business is all about.
There is no doubt those with pets, dogs in particular, find it much harder to get into rental property. It therefore makes sense for a landlord to appeal to that group by not only welcoming pets, but making their properties pet friendly.
Having a pet friendly property is not without its risks, which may include:
• Damage to your property, like scratched floors, and chewed and soiled carpets.
• Disturbing neighbours. Common complaints include barking, pets doing their daily business on the neighbours’ property (the kids sandpit!).
So how do landlords protect themselves against pet problems?
1. Only allow pets that are suited to the property. Pet friendly landlords do need to ask some additional pet-vetting questions, like:
• What type of pet do you own? (A gorilla may be a problem.) If it’s a dog, what sort of dog is it? Have they had any problems with the dog causing a nuisance previously? It may
be your property is suited to some pets and breeds, but not others.
• How many pets would there be on the property?
• Will the pet live inside or outside?
2. Have a pet bond (but the total bond can’t be more than four weeks rent) and a clause in the rental agreement which outlines responsibility for pet-related repairs (reinstatement typically).
3. Have regular inspections of the property. Inspections should be carried out quarterly anyway, but that’s more important when the tenants include a pet.
These are the basic requirements, but a pet loving landlord could go one step further and offer to board the tenant’s pet when the need arises (at a daily fee of course). Now that would be service!
Having pet friendly living space is also something the developers of high density living areas are starting to consider. Innovative developers are including facilities like dog washing rooms and recreational areas (pet playgrounds!). That enables them to directly target sales to pet owners, and attract a premium on the sale price.
This is a great example of turning what most consider to be a negative, into a positive.
Being pet friendly is not the only area of opportunity for property investors. I am in regular contact with a property investing couple from Nelson, who have established an impressive portfolio by concentrating on rental accommodation for the elderly. Essentially they buy home units, or have units purpose built. They make sure the units are on a single level – no steps to create an obstacle or tripping hazard, have grab rails in the bathrooms, easy access showers, small lawns and gardens fully maintained as part of the rent, security and medic alert alarms, and so on. They also regularly visit their tenants and take a genuine interest in their welfare. The landlords are lovely people, and are ideally suited to the niche they have established.
With an aging population there will be greater demands for this type of housing. It’s a smart way to go for landlords looking to earn a premium and meet an important social need.