Value Over Risk: Increase Revenue By Evaluating Pets on an Individual Basis

Posted by Pat on Mar 16, 2020 11:00:00 AM
Pat

As a property manager, it’s only natural to think of things in terms of risk. Whether it's the new diving board at the resort-style pool, the transition to a keyless entry system or a modification to the types of pets allowed at the community, you can bet the associated risks don’t easily evade the property manager’s mind.

But while considering risk is part of the property management ecosystem, sometimes a modified approach can yield better results. For instance, viewing pets on the basis of value rather than risk can serve the dual purpose of generating revenue while enhancing the resident experience.

Tech advancements have made it possible to evaluate each pet with a household-related risk score based on its individual behavior history and that of its owner, as pet owners sometimes play a significant part of the pet-risk problem in housing. The risk score creates a much more sophisticated way to determine which pets can be allowed at the property. Rather than restrict based upon breed, weight or any other preexisting characteristic, communities can establish a value-benefit analysis of the pet based upon its all-encompassing individual risk assessment.

Here are some ways this can benefit onsite teams:

Sliding-scale pet rent
The riskier pet scores on the risk-scale, the higher premium for it to live at the community. Low-risk pets receive benefits in the other direction in the form of baseline pet rent. This is not only a plausible concept—it is already practiced at numerous communities across the nation. Revenue management teams have crunched numbers and determined a sliding scale can be more efficient than absolute restrictions. Student housing operator Walk2Campus, for instance, posts a pet-rent range on its leasing documents, noting that pet owners can be charged anywhere from a certain low-to-high dollar figure based on a risk evaluation.

Eradicating restrictions
What is the value of allowing a pet on a property whose owner is a chronic off-leash offender? What about a puppy with a propensity for damage? Or how about a well-behaved, middle-aged Ridgeback? By relying on technology in the form of a screening platform to assign the risk, onsite teams will be armed with enough information to determine precisely what those pets and their owners pose in terms of risk. At that point, the community can determine the value of having the pet on the property. Of course, they still have the right not to accept the pet if the risk is too high, but that determination is based on its individual risk assessment. Evaluating pets on a singular basis like breed, weight, age or other absolute restrictions, can be a thing of the past.

Illegitimate assistance animals can recover revenue
With the significant increase of misinformation online, many onsite teams are learning that applicants may try to get around breed or weight restrictions, as well as pet fees, when applying with a pet. This misinformation sometimes leads to applicants saying: “Oh no, this is not a pet -- this is my emotional support animal.” The implication is that no pet breed restrictions or pet fees should apply, and no information can be requested of them. Knowing that some of these applicants are truly “bad actors” hoping to beat the system, several property management companies are removing their pet breed restrictions so a resident’s pet can be freely accepted -- removing the intent to lie. Thus, revenue that would normally be lost if the “bad actors” were able to move in with an illegitimate ESA is now saved.

The crux of the matter is that every pet and pet owner carries a different amount of risk. Think of it in terms of revenue pricing models that evaluate each apartment unit based on certain criteria. Rental properties can monetize this by incorporating data-based, pet-risk pricing models. It simply requires a shift in mindset to consider value over risk.