{"id":45673,"date":"2013-07-31T05:33:45","date_gmt":"2013-07-31T11:33:45","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=45673"},"modified":"2021-03-16T10:08:42","modified_gmt":"2021-03-16T16:08:42","slug":"2013-07-31-tenants-work-in-exchange-for-rent-credit","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2013-07-31-tenants-work-in-exchange-for-rent-credit","title":{"rendered":"Should You Let Tenants Work on a House In Exchange for Rent Credit?"},"content":{"rendered":"

A few weeks ago, I was showing one of my units to a series of prospective tenants. One of the potential tenant applications asked,\u00a0“Do you like the carpet?”<\/p>\n

I looked at it. It was brand-new carpet, installed only a few weeks prior. It was a neutral color. It was, in short, the least-offensive, least-objectionable carpet that I could imagine.<\/p>\n

“What do you mean?,” I asked.<\/p>\n

“Well, I’ve done some contracting work,” he replied, “and I could install hardwoods in exchange for a rent credit … ”<\/p>\n

Oh no. No, no, no.<\/p>\n

I’ve never allowed a tenant to do any type of repair, maintenance or upgrade work in exchange for a rent credit. That’s not<\/em> due to a lack of offers. That’s due to my assumption that allowing a tenant to work on the house is a potential recipe for disaster.<\/p>\n

I’ve never heard any stories of that type of arrangement — working on a house in exchange for rental credit — going well. (In fact, I welcome those stories … if you’ve done this, and it’s worked out for you, please tell me about it in the comments below).<\/p>\n

But I have heard plenty of stories about work-for-rental-credits going badly. Here are a few of the stories that stand out in my mind:<\/p>\n

#1: The OverPriced Paint Job <\/h2>\n

I know a landlord in the Boston area who agreed to let his tenant re-paint the interior of their condo in exchange for one months’ rent. The landlord<\/a> didn’t stop to crunch the numbers before agreeing to this arrangement. Later he realized that he’d effectively “paid” (in the form of lost income) more than $1200 to paint a very small space, only a few hundred square feet. The landlord, in other words, egregiously overpaid for the service.<\/p>\n

And he got off lucky. Imagine what would have happened if the tenant did a terrible job — one that would need to be immediately re-done — AND THEN insisted on getting a rental credit for it?<\/p>\n

#2: The Unstated Upsell <\/h2>\n

I know another landlord in the Denver-Boulder area who agreed to let his tenant do landscaping\/gardening work in exchange for a rental credit. They negotiated an hourly rate for the labor, and the landlord agreed to compensate for the raw materials with a receipt.<\/p>\n

You can imagine how this story went: the landlord ended up paying far more for raw materials, and for a far higher number of hours, than he had anticipated. The tenant did good work and created a fantastic-looking space, but the improvement went far beyond what the landlord had expected. The landlord, in other words, got “upsold” without knowing it.<\/p>\n

And again, he got off lucky — \u00a0the strong quality of the work mirrored the cost. Imagine what would have happened if the tenant over-inflated his hours, or did a terrible job?<\/p>\n

**<\/p>\n

Those are the two stories I’ve heard, but I’m betting there are more. If you’ve ever agreed to let a tenant do work in exchange for a rental credit, share your story below. I’m sure there are more horror stories, and (potentially) there might be some good examples, too.<\/p>\n

But one thing is certain: I’m never going to allow this arrangement in any of my rentals. I’d rather keep the landlord-tenant relationship as simple and clean as possible.<\/p>\n

Photo: cncphotos<\/a> <\/font><\/p>\n","protected":false},"excerpt":{"rendered":"

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