I have a prospective tenant who wants to run a home day care. Any advice on what I should look out for, or any one here with experience with tenants running a home daycare could please provide some insights on pros, cons, risks and any potential maintenance or liability issues ?
I’ve checked with insurance, lawyer etc. they all say they will do whatever it takes ( rental dwelling policy, lawyer would add lease terms etc) but Im a bit worried this might be too much risk for not much gain.
I would have your attorney review your lease and make any necessary changes, but I would make sure they have the appropriate insurance (and enough of it), and I want to be added as an additional insured.
Maintenance is another issue altogether. What is the difference in rent if you rent to this tenant vs another tenant who is just going to live there? If it is minimal, I would probably pass on the daycare tenant or tell them your concerns, and for those reasons, the rent needs to be higher. Lastly, I would ask for a larger deposit.
One more thing that worries me is that this prospect is not financially sound and will be getting a guarantor. This will be their first time owning a home childcare while they claim they have previously worked in the industry and are licensed.
I would surely ask for evidence of all of that, but should their lack of ownership experience and their reliance on a guarantor be a concern / redflags?
One more thing that worries me is that this prospect is not financially sound and will be getting a guarantor. This will be their first time owning a home childcare while they claim they have previously worked in the industry and are licensed.
I would surely ask for evidence of all of that, but should their lack of ownership experience and their reliance on a guarantor be a concern / redflags?
Yes, that is a red flag, along with anyone who says, "they all say they will do whatever it takes." When I have rented to people who say something along these lines, they are the ones that try to renegotiate down the road after you worked with them.
If they do not have sound finances, you cannot really trust them to pay the insurance premium, pay you, and run a profitable business.
@Ben Dan how many kids? Are you set up for the traffic. Liability? Family home daycares are small. However a daycare can run the gamut from a few children to staff and renovations.
@Ben Dan how many kids? Are you set up for the traffic. Liability? Family home daycares are small. However a daycare can run the gamut from a few children to staff and renovations.
Yea. They said 6kids. I think the traffic part is ok but just worried they could be more demanding (bringing home to code if any, or any other mods needed by the city etc) and if they dont get the business rtc.
@Ben Dan This is what they call a registered family day care or child care home. The 6 kids I believe needs to include their own children. Look up what this means in your area to be a registered family day care. Be aware if your home is pre-1970 lead regulations are relevant.
Pros: they are being upfront and it sounds like they want a formal rather than informal situation. likely they will stay.
Cons: Liability, traffic.
Questions: are they going to want to put up play equipment, fences? hours?
@Ben Dan This is what they call a registered family day care or child care home. The 6 kids I believe needs to include their own children. Look up what this means in your area to be a registered family day care. Be aware if your home is pre-1970 lead regulations are relevant.
Pros: they are being upfront and it sounds like they want a formal rather than informal situation. likely they will stay.
Cons: Liability, traffic.
Questions: are they going to want to put up play equipment, fences? hours?
Yeah. Its a pre 1970 home. Im ok with play equipment etc as the property is fenced. My worries are liability, their ability to pay rent ( since they are not employed and I think they are anticipating income from this business) and their lack of prior experience ( which I think would lead to potential unnecessary issues if any). Am I overthinking ?
@Ben Dan I wouldn’t even consider this. Limited upside for you and much higher liability. Doesn’t matter how much Liability insurance you have, it’s just more risk. Are they going to pay you significantly more than a typical tenant?
@Ben Dan unemployed and no experience I would not accept. They don't know the business or the risks. To me if someone asked me about this in the case it was supplemental income and they were registering because a stay at home mom was supplementing their income I might consider it. Is this the best candidate?