When Christchurch Property investor Blair Anderson talks about “the big hairy problem” he’s not referring to his dog. This problem, says the dog trainer and behaviourist, reaches across whole cities.

It’s about the ongoing failure to recognise the crucial social role animals and pets play in our lives.

The fact few others have cottoned on to this glaring niche opportunity has been significantly advantageous for Anderson and his partner Natalie Perzylo.

It’s enabled them to grow their pet-friendly property portfolio in Christchurch over the past three years, rapidly and with ease, from one to 14 income streams.

In the process, they have become passionate advocates for more sustainable thinking around pet friendliness in our cities.

How It Started

Anderson and Perzylo became aware of the lack of pet-friendly properties when thousands of pet owners across Christchurch were forced from their homes after the earthquakes struck and pet owners struggled to find temporary accommodation: most landlords simply don’t like tenants with pets.

The pair heard heart-wrenching stories from pet owners who had had to deal with the trauma of leaving their homes and also found themselves in the unbearable situation of not being able to take their pets with them.

“I spoke to a guy on a plane who said he was leaving Christchurch to live in Auckland. He admitted with guilt he had had to euthanase his best friend that morning. No-one could take his dog. That was the kind of pressure on people.” Pet lovers themselves, Anderson and Perzylo run a website called Doglinks.co.nz which has helpful advice for pet owners. They were keen to help out pet owners and by chance, the earthquakes put them in a position to do so.

Between Zones

For several years before the earthquakes they had toyed with the idea of buying an investment property, but never quite got there. Their first purchase just across the street from where they lived in Wainoni Rd came about when they were in limbo between the red zone and green zone, waiting to hear from the Canterbury Earthquake Recovery Authority (CERA) on whether their own property would be acquired by the State.

As they were waiting and time was marching on, they decided to rent the property - a three-bedroom home with granny flat. So they furnished the dual-income property (which they bought for $400,000) and rented it out, like a motel service to pet-owning families – earning an impressive $1800 a week.

That sounds high – but it was set high to balance the uncertain duration of occupancy – part and parcel of this type of tenancy and unique to the Christchurch market at that time.

Opportunity Presents

Needless to say, the bank manager was happy. Anderson and Perzylo quickly saw an opportunity to provide further accommodation to distressed homeowners who had to leave their homes – and were heavily subsidised by (CERA) and the Christchurch Council. They soon acquired another property, a garage, and made improvements, converting it into a studio. Again they furnished it for temporary accommodation.

These people owned their own houses. There were none of the usual cross-checks and tenancy checks needed. They were clients of insurance companies that needed temporary accomodation - Blair Anderson

With their healthy cashflow they were soon able to buy a three-bedroom home in New Brighton.

Anderson and Perzylo continued to add to their portfolio, advertising fully-furnished properties on the Post Earthquake Tenancy Services website, which linked to their own site www.holmesforrent.co.nz.

Their strategy was buying easy do-ups in areas with strong demand from people repairing houses. “People didn’t want to shift far from schools and they wanted to bring their dogs. It wasn’t the usual landlord/ tenant scenario,” Anderson says. “These people owned their own houses. There were none of the usual cross-checks and tenancy checks needed. They were clients of insurance companies that needed temporary accommodation.” Many were prepared to pay extra to secure a place for their pet.

Pets' Important Role

One tenant thanked Anderson for having him and his dog. He said: “If it wasn’t for my dog, I would have jumped off Whitewash Head.” During the earthquakes, Anderson says, that was a common thread. Pets played an important social role, largely unrecognised by authorities – and landlords.

All Anderson and Perzylo’s properties at that time were short-term rentals and were furnished like motel rooms, which gave significant cashflow leverage, plus a significant tax write down on the bulk of the material purchased to provide the high standard required by insurers. “Insurers made it delightfully easy,” Anderson says.

But it wasn’t all plain sailing. Every acquisition had its idiosyncrasies. “Some were tidy. Some proved problematic. Many involved complex scenarios where insurance money was transferred with the sale allocated to reflect the cost of the repair. Some came with up to $80,000 cash accompanying the purchase, which made it easier to get a mortgage on the day, but it had to be kept on the books as a liability because it was unspent. You had to make sure the money was not considered accessible income for tax purposes.”

Some still have unresolved issues and Anderson says he can’t sell them, but they’re still earning a good rental, “because we’re dog friendly.”

Pet Benefits

Anderson says it’s difficult to determine how much extra their properties earn through allowing pets, but explains there are intrinsic benefits.

“When you advertise, you have people queuing up and you get to pick quality tenants and they think you’re great landlords,” he says. “They are more compliant. Dog-friendliness means we have good tenants who work with us or empathise with us in constructive ways.

“Our property business is profitable. We’re significantly cashflow positive with close to a 10% yield. That’s a good return in this market.”

But pet friendliness is not just about them, Anderson says. “We’ve leveraged off this with a modest property investment portfolio. We’ve learned there are multi-million dollar dividends confronting pet friendly investors where there is densification.”

Anderson believes pet-friendly buildings sell for more, quicker. “It’s a vertical marketing strategy that creates better cashflow for investors – for those who have pets already or would like the option of a dog. This is not recognised."

No Pets Rule

He cites a couple who moved into a Gold Coast apartment tower with their small dog as an example of changing attitudes. Several years after purchasing the apartment, the body corporate held a meeting and decided on a nopet rule – owners didn’t have to get rid of their pets, they just couldn’t replace them.

The couple were not happy as they believed this devalued their apartment and asked for a judicial review.

The judge found that based on evidence received from valuers and real estate agents – the value of the property on an open market was reduced by 10%. He found in favour of the couple: the decision to establish a no-pet rule was in conflict with the best interests of the owners.

“This is a time of changing paradigms,” says Anderson

Change Needed

Perzylo is originally from Canada so Blair and Natalie travel there often. As dog owners, they have taken an interest in how Canadians are tackling pet-ownership in densely populated areas.

Toronto is an example of a city with a high strata title fabric, a city reflective of a dense urban situation with less dependence on cars and where people are tenants for life,” Perzylo says. “We’ve learned from this city, there are significant benefits to be had from an investor and developer perspective if they resolved the problem of providing for pets.”

Anderson says the city encourages petownership in apartments by including dog washing areas and indoor recreational areas for dogs in winter.

There’s a lesson, Anderson says, for places like Christchurch. “Christchurch has taken 10,000 families and put them on sections the size of postage stamps and not considered what that meant. I’m dealing with people who say: ‘It’s not the same for our dog’.”

We are just a small investor that has grown from owning a house across the road to having a portfolio of 14 income properties and we haven't had to increase our exposure one bit. - Blair Anderson

Anderson is adamant landlords can get better yields by including pet friendly design – and that will make the bank manager happy too.

“We are just a small investor that has grown from owning a house across the road to having a portfolio of 14 income properties and we haven’t had to increase our exposure one bit. We still have the same gearing ratio as when we started and we’re healthier than ever because of capital gains and a bank manager who will bleed all over the floor for us. Petfriendliness is good business.”

The pair will continue growing their petfriendly portfolio and support pet-friendly initiatives in Christchurch.