Chicago Real Estate Statistics: Pet-friendly apartments
Towards the end of last year I did a some research into the things that affect rent rates in Chicago. I used the MLS for my research. Some of this info has already been shared on my Facebook page but I want to share all of it with you along with some in-depth analysis.
Today I'll be talking about the effect of a landlord's pet policy on rent rates. The chart to the left shows the rent rates obtained for apartments that allowed both dogs & cats, cats only, and no pets at all in the downtown, near north and far north areas of Chicago from 2009 to 2011. (You can click on the chart to view it full size.)
You'll notice that the rates for cat-only apartments are much lower. Read on for my thoughts about the reasons for this.
The results surprised me. I was expecting the rents to increase in direct proportion to the number of species allowed in a building. I was very very wrong.
I have some ideas as to why this is happening, and I'd love to hear yours as well. In terms of rentals that allow all pets, basic supply and demand is an easy cause. Apartments that allow all animals are the smallest subset of the rentals available, so they can afford to charge a higher rent rate.
Meanwhile, a landlord who will not allow any pets at all is a landlord who is willing to take a firm stance on the quality of her investment. That kind of landlord is most likely to also take good care of the rest of his building and exercise good judgment on what kind of tenants to allow. Meanwhile, tenants who want quiet will gravitate towards these animal free buildings, leading to a more solemn and studious bunch on the whole.
But why such a big drop in rent for buildings that only allow cats? That was the puzzle. I think it reflects the attitude of both the landlord and the tenant, with a hat tip towards overall size of the apartments.
A tenant who wants a pet but cannot afford the time and expense of a dog will go for the cat instead. Cats are cheap pets, as Savings Experiment: Cats vs Dogs at Dailyfinance.com proves, with an accompanying adorable video. These tenants on the average are not as wealthy (or not as committed to their decisions) as would be a person who would go all out and get a dog. I'm not dissing cat people here. I love cats. I'm just saying that dog owners are probably a little more comfortable with their financial position than cat owners. Anyone who can find me some stats is welcome to pop them up in the comments.
After speaking with many landlords, I can tell you that a landlord who will allow cats but not dogs has two main reasons for doing so. One is the idea that cats cause less damage to a property than dogs do. (This is not necessarily true, but for an urban myth it's remarkably pervasive.) The other is the idea that they will maximize their potential tenant pool by allowing at least some pets, but won't have to deal with the high insurance premiums that come from having to get a dog bite rider on their umbrella policy. Both of these have one underlying cause in common: they indicate a landlord who's in it for the money only.
I'll speak more in depth in a later article about running your rental business for the money or for the property, but for now let's just say that a landlord who's only in it to rake in the dollars will rapidly get a reputation as a slumlord. Their reluctance to fully commit one way or another will be reflected all throughout their business. If they cut corners on the pet policy, there's a high likelihood that they'll go for the slightly cheaper paint, the wooden back porches instead of the steel ones, and 100 amp electrical service instead of a more modern 200 amp system.
The size of the apartment also is a contributing factor here. Dogs need more space than cats. The smaller the space, the lower the rent. A one bedroom apartment that a landlord feels is big enough to comfortably house human + dog is likely to have more space on the whole than one only acceptable for human + cat. While rentals in Chicago rarely adhere to a strict price per square foot, there's definitely a size bias involved when dealing with an inventory in the thousands as seen in the MLS over a 3 year timespan.
So, if you're a tenant and want to save money, rent in a cats-only building (if you can). Depending on which neighborhood you choose, you could save 6-12% over a building that doesn't allow pets at all, and nearly 11-20% over a building that allows dogs AND cats.
If you're a landlord trying to decide on a pet policy, just bite the bullet and allow both dogs & cats if you can. You stand a chance of gaining 4-10% more in rent by doing so over not allowing any pets. If you're not willing to allow all animals, then your next best option is ruling them out altogether.
The data was consistent from year to year, based on MLS activity. I restricted my search to apartments and condos for rent in multi-unit buildings, so it may vary somewhat for single family homes for rent. However, given my underlying hypotheses behind the reasons for the price difference I would imagine that it would be consistent regardless of the property type.
What do you think? Am I harshing on the cat owners here? Is there some other possible explanation that I'm not seeing? Tell me in the comments, I'd love to hear it. If you have a particular statistic you'd like me to look into for next time, let me know that too!