Rent to my Contractor?

29 Replies

Disclaimer: I sincerely do not wish to offend anyone... however, I would like to very kindly request to only have individuals that have actually been in this situation to provide feedback. Although everyone's opinion is valuable, we often tend to quickly give an opinion on what we "would do" in a certain situations, when "real life" tends to unfold very differently... 

Hello Everyone! 

Okay, here's the situation... I'm currently the middle of a rehab on a flip property that I've been leaning towards holding as a rental, as it is always my preferred exit strategy. Today I received a call from a contractor I've worked with a few times and he asked if I'd be willing to rent the property to him once it's complete. The issue is, I do not really want to rent to this contractor... He has not been the most "reliable" as far as showing up on time, being prepared to complete jobs,  101 excuses, etc. He's a fairly young guy who is good at what he does, but just needs to learn how to run his business more professionally... With all the hassle I receive working with him as a contractor, I can only imagine the headache I'd receive with him as a tenant. However, I do not want to ruin the relationship by flat out telling him that I do not want to rent to him. 

I would really like to hear how others have handled this particular situation or similar situations. 

Thanks!!! 

Your asking a double question.. should you rent to a contractor you do business with, and should you follow your gut.. the answer is always follow your gut, and never rent to anyone you personally know or do business with.

Don't rent to him. Tell him your planning to move your aunt or mother in, they never argue against that.

Originally posted by @Levi T. :

Your asking a double question.. should you rent to a contractor you do business with, and should you follow your gut.. the answer is always follow your gut, and never rent to anyone you personally know or do business with.

 Sorry, allow me to clarify. I know for sure that I do not want or will not rent to him. I'm just curious if others have been able to successfully handle the situation and maintain the business relationship. 

Originally posted by @Steve B. :

Don't rent to him. Tell him your planning to move your aunt or mother in, they never argue against that.

 Lol.. That's not the most "honest" approach, but you definitely make a good argument. It's hard to rebuttal that one. 

Ah yes, I have had this come up, also with a contractor.

I let them know that I wont know the rent amount and the plans for the property until it gets closer to being completed and when youve done the due diligence.  I also say that there is a chance i will be selling, so i just dont know yet.

Once it is up for rent and he can see that, let him know that your partner on the deal wants to see all the applications prior to approval and he has the final say.  (Silent partner. money partner. you dont need to describe too much other than you are not the one in charge of that decision. 

yes it's not exactly true but I find that more effective,  and painless for both parties involved, than telling the local methhead who is waiting on his SSID payment that "I'm not even taking an application from you because clearly you're a irresponsible, unkempt, disheveled loser" 

@Greg Shyne It always amazes me how people are so afraid of simply telling the truth and would rather spend their time making up all sorts of stories. Sorry, I haven’t been in the exact same situation but I have been asked by a 30 year friend and just today, by my sister in law. Answer: In order to maintain relationships, we don’t rent to family or friends. Easy peasy.

Originally posted by @Kalimah Jenkins :

Greg Shyne It always amazes me how people are so afraid of simply telling the truth and would rather spend their time making up all sorts of stories. Sorry, I haven’t been in the exact same situation but I have been asked by a 30 year friend and just today, by my sister in law. Answer: In order to maintain relationships, we don’t rent to family or friends. Easy peasy.

 I complete agree with your answer and I have actually used this line with friends and family a few times. However, this one is a little different since I still would to work with him as a contractor.  But either way, you're right and I respect your input. 

Thanks

Greg

Originally posted by @Christine Kankowski :

Ah yes, I have had this come up, also with a contractor.

I let them know that I wont know the rent amount and the plans for the property until it gets closer to being completed and when youve done the due diligence.  I also say that there is a chance i will be selling, so i just dont know yet.

Once it is up for rent and he can see that, let him know that your partner on the deal wants to see all the applications prior to approval and he has the final say.  (Silent partner. money partner. you dont need to describe too much other than you are not the one in charge of that decision. 

 Thanks for the feedback! I appreciate your insight. 

Regards, 

Greg

Originally posted by @Greg Shyne :
Originally posted by @Kalimah Jenkins:

Greg Shyne It always amazes me how people are so afraid of simply telling the truth and would rather spend their time making up all sorts of stories. Sorry, I haven’t been in the exact same situation but I have been asked by a 30 year friend and just today, by my sister in law. Answer: In order to maintain relationships, we don’t rent to family or friends. Easy peasy.

I complete agree with your answer and I have actually used this line with friends and family a few times. However, this one is a little different since I still would to work with him as a contractor. But either way, you're right and I respect your input.

Thanks

Greg

Hi Greg, I don't think you're understanding that you can still do business with this individual after giving him a "denial" with reasoning being "I, (as a professional landlord) prefer not to rent to friends or family in order to maintain ongoing relationships." I think you are overcomplicating this issue, when in reality it's just a short conversation you could pick up the phone and be done in 2 minutes. There aren't any hard feelings, and there's no reason why you shouldn't be able to continue hiring him for work in the future.

Although by the sounds of his work ethic and your frustration, it may be worth your time to start seeking out other contractors. Best of luck! Hope you find the clarity you are seeking.

Originally posted by @Brandon Ingegneri :

I didn’t even read the post, but just going off the title I’ll tell you not to trade rent for work. Never ends well. Best of luck.

His post mentioned nothing of trading rent for work; it may be wise to actually read the post in the future to avoid the spreading of misinformation and derailing the thread. Plus then you might actually be able to contribute to Greg's issue. 

Originally posted by @Austin Peck :
Originally posted by @Brandon Ingegneri:

I didn’t even read the post, but just going off the title I’ll tell you not to trade rent for work. Never ends well. Best of luck.

His post mentioned nothing of trading rent for work; it may be wise to actually read the post in the future to avoid the spreading of misinformation and derailing the thread. Plus then you might actually be able to contribute to Greg's issue. 

 It was just a recommendation of something to avoid, but thank you for your concern. 

Brandon Ingegneri, Contractor in RI (#41301)
401-301-5528
Originally posted by @Austin Peck :
Originally posted by @Greg Shyne:
Originally posted by @Kalimah Jenkins:

Greg Shyne It always amazes me how people are so afraid of simply telling the truth and would rather spend their time making up all sorts of stories. Sorry, I haven’t been in the exact same situation but I have been asked by a 30 year friend and just today, by my sister in law. Answer: In order to maintain relationships, we don’t rent to family or friends. Easy peasy.

I complete agree with your answer and I have actually used this line with friends and family a few times. However, this one is a little different since I still would to work with him as a contractor. But either way, you're right and I respect your input.

Thanks

Greg

Hi Greg, I don't think you're understanding that you can still do business with this individual after giving him a "denial" with reasoning being "I, (as a professional landlord) prefer not to rent to friends or family in order to maintain ongoing relationships." I think you are overcomplicating this issue, when in reality it's just a short conversation you could pick up the phone and be done in 2 minutes. There aren't any hard feelings, and there's no reason why you shouldn't be able to continue hiring him for work in the future.

Although by the sounds of his work ethic and your frustration, it may be worth your time to start seeking out other contractors. Best of luck! Hope you find the clarity you are seeking.

 You're absolutely right... I'm overcomplicating the issue. I just figured it would be nice to get the perspective of others that have handled this situation. 

Thanks sir!

@Greg Shyne I would simply tell him straight up that you don’t want to intermingle too many moving parts in an effort to avoid any potential issues. Just be up front with him, but obviously leave out the part about having doubts about him. If he is a blue collar guy, he will appreciate the lack of bs and you being straight forward.

I know I mentioned this previously prior to reading the entire post, but I can almost guarantee that if you do let him move in, at some point relatively soon, he will want to trade work for rent. It gets messy. I rented to one of my subs early on. #fail.

Brandon Ingegneri, Contractor in RI (#41301)
401-301-5528
Originally posted by @Brandon Ingegneri :

Greg Shyne I would simply tell him straight up that you don’t want to intermingle too many moving parts in an effort to avoid any potential issues. Just be up front with him, but obviously leave out the part about having doubts about him. If he is a blue collar guy, he will appreciate the lack of bs and you being straight forward.

I know I mentioned this previously prior to reading the entire post, but I can almost guarantee that if you do let him move in, at some point relatively soon, he will want to trade work for rent. It gets messy. I rented to one of my subs early on. #fail.

 Thanks for the helpful feedback man.

Originally posted by @Greg Shyne :
Originally posted by @Brandon Ingegneri:

Greg Shyne I would simply tell him straight up that you don’t want to intermingle too many moving parts in an effort to avoid any potential issues. Just be up front with him, but obviously leave out the part about having doubts about him. If he is a blue collar guy, he will appreciate the lack of bs and you being straight forward.

I know I mentioned this previously prior to reading the entire post, but I can almost guarantee that if you do let him move in, at some point relatively soon, he will want to trade work for rent. It gets messy. I rented to one of my subs early on. #fail.

 Thanks for the helpful feedback man.

 Anytime. 

Brandon Ingegneri, Contractor in RI (#41301)
401-301-5528

I'd take a different tack on this. 

We've rented successfully to family, friends, coworkers and contractors before. The key is having clear expectations, roles, goals and boundaries. 

Once a property is ready to rent, we will consider all interested applicants. We establish our rental criteria and our application process in advance. We would let the contractor know this. If after looking at our rental criteria he thinks he qualifies, let him apply. 

Our application process begins with tenant screening questions and an interview. His application would be considered with all of the other applications we receive. If I have reservations about him and his tenant worthiness, it's likely to be validated by the application, when checking references, or during the background check. Chances are he would self select out of the process if he was not a good candidate. He would not have any advantage over other candidates. If he doesn't meet our criteria to rent, or I choose a better applicant, then I would have to tell him he didn't make the cut and the reason why I was denying his application. All part of what I do.

What I would not want to do is create a chilling effect. However, I would be open and honest with him about the property, the application process, what we are looking for in a tenant, and our management style. I would keep my communication with him kind, respectful and professional. Anyone who works with me or rents from me will learn soon enough that I value open and honest communication, that I will establish clear relationship boundaries and can navigate well between my roles.

I have rented successfully to my contractors.  Just like @Marcia Maynard stated, I qualified them just like any other tenant.  I found this situation extremely advantageous because I had easy access to my contractors because of the additional aspect of the relationship. Having a contractor live near my other units has gotten me some work done quickly.

Now, I would lay down HEAVILY the expectations of renting from me.  There would be no slack, and breaking rules and non-payment of rent would quickly get you evicted!  What does worry me about how you described the contractor is the character flaws of how he runs his business.  So I would proceed with caution.

VERY IMPORTANT----You might want to consider taking his application anyway (if he meets your basic requirements).  Refusing to take his application may get you in deep water as far as federal and local fair housing laws. 

Originally posted by @Greg Shyne :
Originally posted by @Levi T.:

Your asking a double question.. should you rent to a contractor you do business with, and should you follow your gut.. the answer is always follow your gut, and never rent to anyone you personally know or do business with.

 Sorry, allow me to clarify. I know for sure that I do not want or will not rent to him. I'm just curious if others have been able to successfully handle the situation and maintain the business relationship. 

 Sure I do this a few times a year in my region. Just tell them it’s your policy that you do not rent to friends or people you do business with. They will understand. 

Originally posted by @Marcia Maynard :

I'd take a different tack on this. 

We've rented successfully to family, friends, coworkers and contractors before. The key is having clear expectations, roles, goals and boundaries. 

Once a property is ready to rent, we will consider all interested applicants. We establish our rental criteria and our application process in advance. We would let the contractor know this. If after looking at our rental criteria he thinks he qualifies, let him apply. 

Our application process begins with tenant screening questions and an interview. His application would be considered with all of the other applications we receive. If I have reservations about him and his tenant worthiness, it's likely to be validated by the application, when checking references, or during the background check. Chances are he would self select out of the process if he was not a good candidate. He would not have any advantage over other candidates. If he doesn't meet our criteria to rent, or I choose a better applicant, then I would have to tell him he didn't make the cut and the reason why I was denying his application. All part of what I do.

What I would not want to do is create a chilling effect. However, I would be open and honest with him about the property, the application process, what we are looking for in a tenant, and our management style. I would keep my communication with him kind, respectful and professional. Anyone who works with me or rents from me will learn soon enough that I value open and honest communication, that I will establish clear relationship boundaries and can navigate well between my roles.

 This was VERY helpful. Thank you so much for the detailed response. This is exactly what I was looking for. 

Sincerely,

Greg

Originally posted by @Levi T. :
Originally posted by @Greg Shyne:
Originally posted by @Levi T.:

Your asking a double question.. should you rent to a contractor you do business with, and should you follow your gut.. the answer is always follow your gut, and never rent to anyone you personally know or do business with.

 Sorry, allow me to clarify. I know for sure that I do not want or will not rent to him. I'm just curious if others have been able to successfully handle the situation and maintain the business relationship. 

 Sure I do this a few times a year in my region. Just tell them it’s your policy that you do not rent to friends or people you do business with. They will understand. 

Thanks sir! I appreciate the feedback! 

Originally posted by @David S. :

I have rented successfully to my contractors.  Just like @Marcia Maynard stated, I qualified them just like any other tenant.  I found this situation extremely advantageous because I had easy access to my contractors because of the additional aspect of the relationship. Having a contractor live near my other units has gotten me some work done quickly.

Now, I would lay down HEAVILY the expectations of renting from me.  There would be no slack, and breaking rules and non-payment of rent would quickly get you evicted!  What does worry me about how you described the contractor is the character flaws of how he runs his business.  So I would proceed with caution.

VERY IMPORTANT----You might want to consider taking his application anyway (if he meets your basic requirements).  Refusing to take his application may get you in deep water as far as federal and local fair housing laws. 

 Thanks David! I appreciate the insight. I will allow him to apply and treat his application the same as I would the others. 

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