Appropriate rent during construction.

Appropriate rent during construction. by Dan (MN) on July 30, 2012 @14:35

Hello there,

I have a unique situation and need some advice. I currently have a vacant 2 bedroom unit that needs some updating, including a complete kitchen remodel.

I have a new friend that whose lease is about to end and needs to move out. I told him he's welcome to move into our vacant unit and help me remodel it at a large discount.

My question is: What should I charge him and his girlfriend to live there? The place (if remodeled) would earn around $1,000. As it is (without construction) it's probably worth closer to $800. But if they have to deal with construction mess...and he's helping me do all the work, how should I calculate what (if anything) they should be paying me until it's done?

Any advice is appreciated!

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Re: Appropriate rent during construction. by Micah on July 30, 2012 @14:43	[ Reply ]

Don't do it.... Just hire the right people and get it done quickly then rent it out.

Re: Appropriate rent during construction. by Franklin (TN) on July 30, 2012 @14:46	[ Reply ]

I would be VERY careful about this situation. He says he'll help now, but what qualifications does he have to remodel a kitchen? How are you going to enforce him helping out? How much helping out is he required to do? 5 hours a week? 10 hours a week? I can see you being underwhelmed at the actual amount of work he's doing for getting reduced rent (Like in the book, The Rainmaker, where Rudy rents cheaply from Miss Birdie in exchange for yard work). Be sure you spell out what's expected up front. How long is this going to take to remodel? Would he have to move once it's remodeled or spend the $1000/month to rent it? Either way, you need a month to month lease with the work he's going to do spelled out, the amount he's going to pay monthly for x amount of months spelled out, and the rent after the remodel is finished. He's your "friend" now, but when you try to get him to do work and move once you finish the kitchen largely by yourself, you'll be re-thinking that word.

Re: Appropriate rent during construction. by Anonymous on July 30, 2012 @14:49	[ Reply ]

I wouldn't co-mingle rent amount in exchange for work on the remodel. You will run into a situation where he will either feel he is working to much and not getting enough of a discount or you will feel he is slacking and not helping enough with the remodel. What if he decides he doesn't want to help anymore or can't for whatever reason? Do not make one dependent on the other. Rent should be rent without "strings" attached. Calculate the rent for the value as is with possibly a discount for the construction inconvenience. Make it a month to month lease do you can raise rent once remodel is completed. If he is helping you or being employed by you then he should be paid or compensated separately as an employee or day laborer/helper.

Re: Appropriate rent during construction.

Re: Appropriate rent during construction. by OK-LL on July 30, 2012 @15:05	[ Reply ]

In my experience, no matter how good the intentions of both parties in the beginning, the tenant will drag out the work because he's not motivated to do otherwise, in fact he's motivated to keep the rent low by not completing the work. The LL will start to look askance at the materials invoices, labor billing, etc., and your "new friend" will soon become an enemy costing you time and money on the project. Don't do this -- just hire it out properly and a new tenant when it's ready for move-in. One of the cardinal rules of LLing: Don't rent to friends or family; sooner or later, unless you are both exceptional individuals, it will ruin the relationship. Motto #1: No good deed goes unpunished.

Re: Appropriate rent during construction. by Eloise on July 30, 2012 @15:13	[ Reply ]

If after all these warnings, you are still considering it, here's what would do: #1. Treat the two things as two separate transactions. #2. Month to Month lease. With a discounted price from the 1k you are wanting to charge, if you are looking for a number, you say $800.00 as it is, how about $700 - $750.00 for the troubles? #3. Commit to a deadline #4. Commit to a price for his labor, if he's qualified for this type of work. Draw up a contract for this as well, nothing fancy, just an agreement stating the work, outlining his responsibility and a deadline. Pay him as soon as it's done. {Even if he then turns around and gives you your money back for rent, that is ANOTHER transaction, do not do one thing in exchange for the other. #5. As soon as the work is done, and the deadlines are met, draw up your LPA yearly lease and have him sign a 1yr agreement or move out, for the 1k a month. Best of luck! STUPID MISTAKE I MADE ONCE: I made the mistake of doing a "trade" with my tenant who was a contractor, deducted the fee from the first month's rent and it took him ONE year to make the work he was to do that same month. So, I guess I was lucky the job was actually done and done right, but it took ONE year! I was getting very very nervous, it is more than likely that the work will never happen, so, like I said, I got lucky with my big mistake, never gonna do it again!

Re: Appropriate rent during construction. by Jake on July 30, 2012 @19:45	[ Reply ]

Once this pair gets into your rental you will quickly discover that no work will get done and no rent will get paid. When you take them to court your "tenants" will make the case that your place was not suitable for human habitation. The health department will be all over you too after you get turned in.