Tenant offering to pay 1/2 for new countertops

13 Replies

Hey all, I’ve been faced with an offer from my tenant which I’m going back and forth on and wanting to seek advice from all you experienced landlords. I’ve got a 2 on 1 duplex and one of the units I just recently remodeled, taking the rent from 1900-2450. Post rehab I immediately had a huge amount of interest and immediately signed a year lease. We are about 2 months into the lease and the tenant has asked if I’d be interested in putting in new counter if they would pay half of it. I wanted to see if you guys would ever entertain this and here are some pros and cons I’ve thought of. Pros: -Tenant is more vested, so longer stay -Someone is paying 1/2 the price of the counter top -the unit will bring about 50-75$ more with new countertops -upgrade is happening while rented = no loss of rent due to vacancy during remodel. Cons: -the biggest thing I worry about is uncovering extra work, new back splash, or heaven forbid their is mold or something... -I do all my own maintenance and remodels and know that with every project always come additional work and I really would hate to uncover Pandora’s box while tenants are in there. The current countertop is laminate and in decent condition. At the end of the day, it comes down to me getting some sort of return on my money, and weighing the risk vs gain.

James,
This is a GREAT question. I’ve faced similar situations like this due to my tenants having different taste in colors, countertops, floorings, etc.

The way that I handled it was to offer to do the renovation (up to $1k) for free if they extend their lease another year (assuming they have been a good tenant). I budget for this with all of my units so that if someone decides to stay then we can:
- keep them for another year, since good tenants aren’t easy to come by
- add some more value to the unit (that the tenant desires and is living in during the renovation) sometimes even a little bit on the tenants dime since most tenant requested renovations aren’t less than $1k
- show the tenant that we genuinely care and want them to feel at home
- show them how expensive some of these “easy” renovations can be, which keeps them from asking for a ton of huge changes

Also, one CON that I think you are omitting is that this could quickly turn into the snowball effect where the tenant wants more things changed or they will threaten to not resign. I hope this helps! If you have any other questions, let me know.

Thank you for the great advice and quick replies!

William Nelson, I had thought about doing the same thing with the lease extension. The question I have is would you increase rent on year 2. I don’t want to come across greedy, but I am already about 100$ under market rent, so I am not sure I want to extend 2 years at the same price when I have a large pool of qualified tenants to choose from.

And yes, you mention the “snow ball” effect. Haha I already changed the faucet pre-move in for them. Typically I wouldn’t be willing to bend over so much for a tenant but when they are taking pride in the unit, that does mean something.

Max Tanenbaum, that was one of my concerns as well. I did contemplate doing a remodel on the kitchen after they moved out, but quite honestly I don’t foresee the kitchen added a ton of value based on where the market is on this unit and the fact that the kitchen is already is good shape. I did consider getting new doors down the road.

Hey @James M. I definitely would not do them right now, the reason being mainly your tenant has only been there 2 months. You don't yet know if there going to be great tenants, lose there job etc. What I normally do is first no talk of upgrades in the first year lol. After that though depending where they are in there lease we do it after lease renewal. For example one tenant wanted his unit repainted they had been there a few years so it wasn't an absurd request. They had 4 months left on there current lease, so I told my property manager to inform them we would paint after they resigned a new lease. Here's the key not sign a new lease immediately after finishing there current lease and then signing a new lease! If we all agree good tenant's are hard to come by then we need to keep them as long as possible! Finish current least THEN renew the lease with upgrades!

No tennat is ever going to be reliable regarding agreeing to stay for X amount of time.

I would do the upgrade under two conditions. First that the cabinets are new and second the tenant agreed to a immediate rent increase of $100/month bring his rent up to where it should be for the unit.

Unlikely he would agree so no work necessary.

Always leverage tennat requests into higher rent. Keep in mind that when restricted to annual rent increases it is legal to increase rent at any time if the tenant voluntarily agrees.

No i would not do this most likely. I would say sure I’ll do it if they pay me in full up front. Not sure why they’d only pay half. They’re the ones who want it not you.

It’s likely theubwouldnt do this and so I would likely end up just saying no.

Originally posted by @James M. :

Thank you for the great advice and quick replies!

William Nelson, I had thought about doing the same thing with the lease extension. The question I have is would you increase rent on year 2. I don’t want to come across greedy, but I am already about 100$ under market rent, so I am not sure I want to extend 2 years at the same price when I have a large pool of qualified tenants to choose from.

And yes, you mention the “snow ball” effect. Haha I already changed the faucet pre-move in for them. Typically I wouldn’t be willing to bend over so much for a tenant but when they are taking pride in the unit, that does mean something.

Max Tanenbaum, that was one of my concerns as well. I did contemplate doing a remodel on the kitchen after they moved out, but quite honestly I don’t foresee the kitchen added a ton of value based on where the market is on this unit and the fact that the kitchen is already is good shape. I did consider getting new doors down the road.

@James M.

I often times keep prices under market value if my tenant doesn't give me issues and always pays rent on time - it depend on each persons situation and the cashflow that they are gathering from the property. Regardless, I raise the rent EVERY year based on inflation. A small $10 to $20 dollar increase doesn't seem like a huge deal to the tenants but on all your properties after a couple of years it can make a huge impact.

For instance, assuming I raised the rent only $10 per unit per year on all 19 of my units - it creates an extra revenue of $2,280 each year! I hope this helps, let me know if I can do anything else to help.

I had a tenant who wanted to install a fence! I freaked out because I didn't want to pay for that. Turns out they wanted to do it themselves and just wanted me to sign off on the HOA request. Crazy! Of course, I said yes. They installed a fabulous fence too.

My tenants loved the house, by the time of fence installation they had lived there for years, and they wanted to have privacy.  It turned out great because they did the work, and I got the benefit.  

I'd ask myself if your tenants are similar.  Someone who wants to upgrade is usually conscious of their surroundings and they'll probably care for the countertops.  Just make sure to go granite since it's so durable, also you can get granite overlays for less.

In my opinion, the nicer the house looks the less likely you'll have someone wanting to split besides if they move out, you've got half the granite paid for!  

Let the numbers dictate. How long will it take to recoup your half? Check out the competition. Do most of them have upgraded counters? If so, I might be inclined to do it.

If you decide to move forward, either give them a few options or at least have veto power! In other words, make sure the counters that go in will be desirable to a wide range of prospective tenants.

Depends. In general, I wouldn't be too open to tenants who want me to screw around with their personal desires - I have enough repairs to think about - sets a bad precedent. OTOH, if a tenant wants to improve my property on their dime, I would be stupid not to entertain the idea and also stupid to let them do the work. Never let tenants do the work.

Thank you all for the great advice and feedback. I greatly appreciate all of you for taking the time to give me your .02. I’m still waiting for the bid to come back on the countertop and then I’ll sit down with the tenant and give them the options or no option at all. Once again I can’t thank you guys for sharing your experience and knowledge