Author Topic: Letting a renter make changes to a rental  (Read 4170 times)

Coneal

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Letting a renter make changes to a rental
« on: October 11, 2013, 07:29:29 PM »
So I have someone interested in renting out the farm house but it has me baffled.  Does anyone know what the catch is or have they experienced this before.

Condition of the house:  it's seen it's better days the walls could use a fresh coat of paint and the carpet really needs to be replaced.  There are hardwood floors underneath.  We are not wanting to put very much money in the house bc we will start the process of selling the place in about two months.  The value is not in the house (most likely would be tore down whoever buys it) the money is in the 40 acres.

A perspective tenet wants to rent the place out fully knowing everything above.  However, they want to be able to redo the inside so that is more livable to them.  They would paint and make the inside of the house look nice again.  They are really attracted to the location bc it's in the middle of both their grandkids. They would make these updates on their own dime with the full understanding that all we have to do is give them 30 days notice once the place sales.  They have said repeatedly that they want to do it so it feels more like a home.  We would not need to reduce rent or repay them for the supplies that are used.

Since this is a little to good to be true.  Where's the catch 22.  What the he'll am I missing?
« Last Edit: October 11, 2013, 07:43:42 PM by Coneal »

Coneal

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Re: Letting a renter make changes to a rental
« Reply #1 on: October 11, 2013, 07:44:08 PM »
My estimate of what they want to do OS around 1500.

Another Reader

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Re: Letting a renter make changes to a rental
« Reply #2 on: October 11, 2013, 08:43:03 PM »
They don't think you are really going to sell.  Or they will make it impossible for you to sell.

I NEVER let tenants do this amount of work.  Even if you have an agreement in writing, you run the risk of a serious and expensive misunderstanding.

If you want to sell this property in 60 days, don't rent it out.  Spend the time doing whatever is necessary to maximize the value of the property.

Coneal

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Re: Letting a renter make changes to a rental
« Reply #3 on: October 11, 2013, 09:07:50 PM »
How can it be a serious and expensive misunderstanding?  It will be in writing that they acknowledge that the place is for sale.

It may be up for sale in 60 days but it might take 6 months to sell. You never know.  Mine as well have income coming in during the meantime.

Another Reader

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Re: Letting a renter make changes to a rental
« Reply #4 on: October 12, 2013, 07:19:20 AM »
What are renters' rights in your state and city?  In many places, tenants can effectively make it impossible for you to show the house to buyers.  Or they can make the house unappealing to buyers.  How long will it take to evict them if they don't cooperate?  Ask the agent you will use to sell the house if this is a good idea.

Have you checked references and run background reports on these prospective tenants?  Have you spoken to their current landlord and the one before that?   You may find these are serial problem tenants that take advantage of people in your situation.  Or they may be perfectly fine tenants.  But people that say they want to spend a lot of money on a house they have to make available for showing and may only occupy for 90 to 120 days are a big red flag.

SnackDog

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Re: Letting a renter make changes to a rental
« Reply #5 on: October 12, 2013, 07:53:03 AM »
What is your recourse if they make a complete wreck of things, as sometimes happens?

tooqk4u22

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Re: Letting a renter make changes to a rental
« Reply #6 on: October 12, 2013, 07:58:16 AM »
Paint and carpet is about all I would permit, even carpet I am not too keen on but I would probably allow it but I may oversee it.   

But as AR said, I would never get a tenant when the plan is to sell in the near term.  The potential headaches of this, and they could be major, are not worth it, and it could impair your sale because otherwise potential buyers might also see the potential for headaches getting to closing.

scarab007

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Re: Letting a renter make changes to a rental
« Reply #7 on: October 14, 2013, 12:11:22 PM »
Why would you rent it if you know you're going to sell? I have sold a few places with renters and it is a bit more difficult to do this.  You are now on their schedule for showing, and open houses. One place I had to sell, the renters did not want open houses at all, and only showings during the day on weekdays. This can be difficult for potential buyers as they look on weekends and after working hours.  You can't know how they keep the place as well and having a good clean place for showing is not easy at times when you have no control. 

You would be better off doing the fixes yourself and put it on the market quickly to sell.  Maybe stage it with nice looking furniture.  The renter could have very old dated, large furniture that does not match or put your property with best foot forward.

Christiana

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Re: Letting a renter make changes to a rental
« Reply #8 on: October 15, 2013, 09:57:01 AM »
Would your prospective tenants be interested in buying the house, if the land wasn't attached to it?