Straw.

I don't see anything inherently wrong with your current layout. Layout is determined by the backyard's relationship to your house (unseen now) and your use of and needs for this space. The dog toilet seems to be your main concern at the moment. That is not my area of expertise. I am a cat person. If the dog people find this post they will be all over you with their tried and true methods of dog toiletry.

Maybe find a local landscaper who does small projects and see if they could install some drainage for you, perhaps channeling the water (French drain?) that comes down from the neighbors to a place where it can run out to the street. If you had good drainage, it seems like it could help your yard stay dry.

Drainage projects are never cheap. And if they are not done by someone with the necessary skills and experience, you could wind up with a worse mess than when you started.

For a cheap and easy but non-permanent fix, a decently thick layer of straw or wood chips/arborist's chips will do the trick. If you want something more permanent then you need to bring in someone that can properly assess the drainage issues and make suitable corrections. But be prepared to pay for it.

Maybe consider artificial turf and patio pavers.

You need to address the driange issue and that could be a s simple as digging a trench and making it look like a dry stream bed. As for dogs this will be better once the dringe is addressed and thne teach them to go in one area that hase pes gravel in it to make picking up the poop easy all year. I would then build a deck not a patio so that the area is raised above the ground and makes it easier to train the dogs too This is a pic of what a dry stream bed looks like it is labour intensive but easy to do DIY You just build it along the fence where the water from the neighbor comes in

Looks like you have a considerable slope, judging from the fence line on the right of the photo. I suggest a short fence near the house, surrounding a new small dog run. That will solve your immediate muddy-paws problem cheaply. The larger scale drainage problem will cost a lot more to correct.

Dogs! · More Info

You can get grass for shade, but I'd be inclined to put in a ground cover. Pachysndra fills in quickly. Then have a mulch path. Train the dogs not to poop on the path.

I have German Shepherds that destroy my yard. They run around and tear up the grass and it's a muddy nightmare. I put down straw one year, but it was a nightmare to clean up. I finally just put down mulch. I order a couple yards every year and cover up the areas where grass won't grow.

Mulch or pea gravel the entire area.

No rocks or gravel. Will make the yard pretty much unusable for any future owners. And be careful with mulch choices. Many will just add to the muddiness. Stick with wood chips or straw.

Well, in my experience, mulch worked great. Didn't add to the muddiness at all. Mine wasn't finely shredded mulch, more of a mix between mulch and wood chips.

But, I agree with no rocks. I had river rock down, and 1, they don't like to walk on it, and 2, the rocks just get pushed down into the soil. And there really is no bigger hell than trying to remove rocks from landscaping.

i agree with mulch. as has been said, straw does NOT decompose and it leaves you with a heavy, muddy mess.

In my case, straw was a horrible mistake. It took me a long time to clean it up in the spring.

I would go with an evergreen shaded ground cover.