I have a tenant who approached me saying he wants to renovate the place, he has done places before, and he wants the place to look nicer for him and his girlfriend. I am happy to fork out money for the material and equipment, but what should I do to protect myself.
he has also expressed concern that if he does the reno’s, he doesn’t want to be kicked out later…
i guess keeping a tenant is a good thing, but what if he doesnt pay rent or something bad in the future?
any sugegstions, draw up an agreement? what should i put in it?
What does he mean by renovate?
I would be worried that he may botch something up. Would you insurance cover this sort of thing? If could work out really well if done correctly.
You could get him to sign an longer lease, but that would lock you in as well. You could always kick him out if he breaks the lease.
maybe you should talk to your solicitor about this.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
You’ll need a solicitor that’s for sure.
But I thought:
1. If the flat was renovated (assuming a good job) then it would rent for more money.
2. The tenant wouldn’t want to renovate themselves out of an affordable flat.
3. You can’t promise the flat to the tenant forever nor can you not claim a higher rent for a better flat.
4. If the tenant stuffs up what happens?
5. etc…So:
1. get the tenant to write up a proposal including diagrams, materials samples / colour schemes etc. (just like if you were getting a third party in).
2. ask the tenant for a quote on their time to do it and for materials.
3. take the proposal to a professional (or two) nd get them to quote on the job.
4. Now you can either:
(a) “pay” the tenant to do the reno by not raising the rent by as much as you would until the cost of the job is paid off.
(b) Pay the tenant cash for the reno and raise the rent accordingly, presumabely the money you paid them would be used to offset the rent increase.
(c) Get a pro in to do the job and raise the rent (the tenant doesn’t get any benefit other than living in a nicer flat)Either way in the above scenario you have a formal contract (hence a solicitor) for work done and consideration in kind. This means if the work doesn’t meet the job specification in the contract you can claim remuneration / reparation (probably covered by insurance too). It also protects the tenant because it guarentees you will provide some quid quo pro for the work done.
I would avoid any situation that starts sounding too much like “mates” verbal agreements as they always end in tears (generally the land lord’s).
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