Renting McDonald’s-Style- “Do you want Fido(s) with that?”

“No, we will never allow pets in our rental home!  They are destructive, the arch-enemy of nice carpet, and borderline evil.  In fact, my Uncle Jeb’s ex-wife got a dog and ran away with Fido 6 months later!”

OK- this conversation might not have happened.

McDonalds’s stock in the mid-1980’s was struggling.  Their same store sales were flat, they couldn’t raise prices due to the competition (Wendy’s and BK), and commodity prices for their ingredients were increasing.  Their CEO was on the hot seat and many dissenters were saying that their best days were behind them.  Things were grim; if the McDonald’s clown smile wasn’t painted on, he would have been frowning.

Then someone came up with a really simple idea: to raise revenue, why don’t we up-sell every customer that comes into our stores with “Do you want fries with that?”?  These six words started the resurgence of McDonalds which saw its stock rise and average ticket rise substantially.  The clown didn’t need to fake it anymore.       

The environment that McDonalds can be compared to the current rental market, where:

1. The overall market is flat (at best) or declining
2. Rental rates can’t be raised due to competitive pressure- there are a lot of rental homes on the market!
3. Prices are increasing- HOA dues, taxes, repair companies, insurance

 So, where is the simple idea to raise revenue?  What can we up-sell tenants with?  How about pets?  The average pet fee in the market is $200 for the first, with $100 each additional; this is a fee (aka non-refundable, money in your pocket), and not part of the security deposit.  Pet owners understand that this is part of the expense of having pets (it’s sort of like kids; you know they will not be net-positive on your cash-flow…); I’ve never had a prospective tenant get rid of their animals (or not pay the fee) if they liked the house.  So you get the upfront pet fee, and the one-month security deposit covers your potential downside if there are repairs needed due to “petscapades”.  Not bad. 

So, stick with me here.  Let’s say you have a prospective tenant with 2 pets generating a $300 pet fee.  Your house rents for $1,000/month which equates to $12,000 annually.  By adding $300 to this revenue ($12,300), you’ve effectively increased your annual return by 2.5% ($300 / $12,000).  Not bad!  What did your stock portfolio return last year?  What about if they had 6 pets?  Cha-Ching!

So maybe you want to start asking your prospective tenants, “Do you want Fido(s) with that?”  

Brett Furniss is the President & Owner of BDF Realty, “Charlotte’s Most Innovative Property Management & Investment Company” (www.BDFRealty.com and www.RentToSell.com).  You can follow his Twitter thoughts on the Charlotte real estate market by clicking on http://twitter.com/bdfrealty.  He is the author of the FREE E-Manual entitled “How to Rent-To-Sell Your Own Home” (http://www.renttosell.com/RTS-Book.html) which details how to get the most potential buyers to your home in this challenging real estate market.