I've thought this through and for several reasons, this is what I'm going to do ... so ... my question:

I posted about this a few months back. I have an older house that is in sad condition...just old and dated. Everything works but things like pink & grey tiles in bathroom, etc. I have decided not to rehab it myself. I found a young couple to rent it at a $500 a month discount . Tenant does construction. They are going to clean it themselves, paint, flooring, etc. Basically anything they want.

Since you have already decided you are going to do this...

Develop a pick list of what needs to be done, when it needs to be done by (realizing tenants will be working on it part time), quality of materials to use, and inspection schedule. Otherwise, you will just end up getting back the house with a couple of unfinished projects, after decreasing the rent month after month.

My lease addresses alterations in the paragraph below. I would think this could be altered to suit your needs. I *would* have a contractor agreement with him *and* a written list of projects, etc. Or you will have a Never-Ending Project House and they will have lived there for cheap and you still have to renovate when they move!

In fact, I would charge regular rent and agree to a rent reduction only for each *completed* project.

I vote for CHANGE YOUR MIND, PLEASE. This is not going to start or end well no matter the paper you have.

I tried this - TWICE! (Slow learner, I guess.) Both times it was a disaster. Once, the tenants offered to paint (approved colors). He was a professional painter at one time, I was told. I ended up with paint drips on EVERYTHING - heating registers, carpet, blinds (they did not take them down first), and ceiling.

The second time, I rented to a guy who had a former position as a "maintenance manager" for a business. He negotiated doing some improvements to my unfinished basement in exchange for reduced rent. It turned into a half-finished mess, and one of his 'improvements' actually cased my basement to start flooding regularly.

Both times I tried this, it cost me much more than I made. Never again.

I believe you have been around long enough to know better. Reduced rent ends up with a hole in the living room floor to upgrade the heating system for better circulation.

If you intend to go forward put them on a month to month, full rent no discounts. Compensation is by project completed and approved by you. Words for the lease:

"Any home improvements or alterations to the building are to be approved by the landlord prior to beginning work, and reviewed for approval by the landlord during and after completion of a project. All improvements to the building approved by the landlord become part of the building and belong to the landlord at end of tenancy. Compensation for any home improvement project is to be in writing and agreed upon by the landlord and tenant prior to beginning work. Compensation for home improvements is not related to rent or rent discounts and rent due is not to be withheld as payment towards projects not completed and approved by landlord. Approval of any home improvement project idea is solely at Landlord's discretion."

Nicole,

No. No. and No.

This is a BAAAD idea. Like a dummy I tried it many times, even bought a course in how to do it. It all sounds so simple! But every time it ended badly for me. Each left me with a bigger mess than before they started. One was sleeping on the floor of the house (his wife had kicked him out) and refused to leave. Had to send in the police. *I* was in danger of a penalty for "allowing occupancy" without an occupancy permit.

Another had my supplies and some tools like my shop vac in his car. He fell asleep at the wheel and the car was impounded. I called the lot to retrieve my stuff and the gatekeeper laughed -"None of that stuff is here. Stuff like that never even makes it to the lot!"

The last one cost me $4000 to fix the work the res "started/demo'd" then left it undone. He moved out of the once OK house but now a raw construction zone because "This house needs too much work".

PLEEESE do not make the same mistake as so many have mentioned here.

I had a "U-Fix Special" house listed in my ad. State Farm spotted it and said they would cancel ALL my insurance if I let a res work on the house.

I too worked a summer job "in construction". I helped load gravel, shoveled gravel, raked gravel, loaded supplies, rode in the truck, unloaded those supplies. Wore a hard hat too.

If this guy is any good, HIRE HIM as an Independent Contractor with specific scope of work, SMALL projects only, like demo the old carpet or pull old wallpaper, one at a time, each with a deadline. Get his signature on an Independent Contractor Agreement before he touches the house.

Millionaires are telling you "don't do it".

BRAD

And your friends here!

thanks all. I am going to do this ... I've gone through the downsides for the past two weeks... sat up many a night pacing and churning it over. This place is inspected so there is no reason someone can't live there. Tenants are signing lease this weekend but don't need to be out of their current place until July 1. they will be doing massive amounts of cleaning, some painting and a few other things prior to moving in. This guy does know how to do things so what he does will be right.

Hopefully I'll report back in 6 months how great this is going.

This is a good little house in a great neighborhood, great school district. Had about 100 applicants ... about 95 of them weren't qualified. Of the others, I did a lot of checking (remember, I live in an area where lots of folks know lots of folks) and I think if anyone can do what I want, it will be this young couple.

It would cost me minimum $25,000 to get this place spruced up if I paid outright for the work, not including the down time. That's all but 5 years to recoup my costs ... not something I'm willing to do at this point in my life.

On the positive side, my brother and his wife got an agreement of the kind that you are making with these tenants. They lived in the place for about 10 years, and slowly made improvements to the dreary, tired farmhouse. The owners wanted to retire to the property, and were able to do that when my brother bought land and built his own house.

Hi Nicole,

While I think everybody is hoping this will work out, the issue is that work is so subjective.

Who pays for material? How is material paid for/reimbursed? How will the actual cost of their labor be determined? How will you pursue eviction if they don't do the work but pay their rent,ie, somebody gets sick, etc...

Legally, I am not sure you can kick them out if they have paid rent. How will you decide what projects to do? What if they break something and claim it was old- just to have rent reduced?

It's be great if there was an addendum that would cover it, but it isn't something that can be measured accurately- especially when your worker is also your renter. We have had bad experiences with renters who want to fix stuff on their own place.

Some renters fear that when the work is done- then what? Will you raise the rent? Can they stay?

Hi Nicole,

While I think everybody is hoping this will work out, the issue is that work is so subjective.

Who pays for material? How is material paid for/reimbursed? How will the actual cost of their labor be determined? How will you pursue eviction if they don't do the work but pay their rent,ie, somebody gets sick, etc...

Legally, I am not sure you can kick them out if they have paid rent. How will you decide what projects to do? What if they break something and claim it was old- just to have rent reduced?

It's be great if there was an addendum that would cover it, but it isn't something that can be measured accurately- especially when your worker is also your renter. We have had bad experiences with renters who want to fix stuff on their own place.

Some renters fear that when the work is done- then what? Will you raise the rent? Can they stay?

well we signed last evening. these folks aren't doing small jobs - they are living there. they are supplying anything they want or need. it's in the lease they can't do anything to the mechanics of the house without written permission. Should they choose to move in and do nothing other than bring their tooth brush, they can.

That said, they power washed the porches and walks last evening. I'd guess the basement too but I don't know. Already fixed the lattice on the back porch. I went past a while ago and it looks like he's working in the bathroom already this morning.

I did tell them I want to come in once a week on Saturday afternoons until they move in... they had no problem with that.

There isn't much they can do wrong here. A really good cleaning and paint job will have me ahead of the game if they only stay two months.