It sounds like an appealing arrangement at first glance: your tenant has offered to perform repairs or improvements to your home in exchange for rent. Your mind may race to all of the needed repairs or desired improvements that your willing laborer could perform. Having your tenant perform the repairs frees you up from the tiresome process of meeting with contractors, obtaining quotes, and having the liquid capital to pay the bill.
If your tenant is performing their own improvements, they will have little room to complain after the fact. They may want to stay in your unit for longer if certain upgrades are made, plus they will be increasing the value of your rental. Performing home improvements may even be their trade or a hobby of theirs, so they may be happy to stay with a landlord who approves this sort of arrangement. Labor is usually a large chunk of the cost for any improvement job. A tenant who is doing their own improvements may be satisfied to live in a work zone, while you might otherwise have to eat the costs of having a vacant unit to perform these upgrades in the future. But before you jump in, there are some serious pitfalls to avoid.
What happens if the work isn’t done?
One bad outcome of this arrangement is what to do when the work is not done. By giving a discount ahead of time, you will be dismayed to find the work isn’t finished or completed at all. Typically in this situation you have little recourse, as discounted rent is difficult to get back.
Control over the workmanship
When you exchange work for rent, you have very little control over the quality of the work. While an outside vendor may be offer a discount for a job that is not performed up to your standards, when a renter is involved it is difficult to get compensated for work that is poorly done.
A better way
Despite these hazards, if you still find yourself needing ready labor or keeping your unit occupied during construction, the best way to move forward is by paying for the work specifically. Pay the tenant for each job that they complete. This method gives the landlord more leverage in obtaining high quality results. It gives you more recourse, despite the blurring of the line between tenant and contractor. It also keeps you from falling into an ongoing arrangement where a monthly discount is given, even though more work may be done in some months that others.
If you do move forward with such an arrangement, there are several important details to hammer out before a single nail is pounded:
Make sure there is a clear delineation of who will be paying for what. Do you have hardware and fixtures from previous work that can be utilized? Who will pick up the supplies? Will the tenant pay for supplies and include the cost in their price? Will the tenant use their own personal tools? If specific tools are needed to complete the job, are you willing to purchase them, with or without your approval?
Selection of materials
Since the current tenant will be living in the space, are you open to their selecting some of the components of an upgrade, or will you make all of the choices? If a specific grade of materials must be used, be sure the tenant knows these specifications as well.
How the work gets done
Set up parameters for all of the important considerations. When must the work be completed? Is there a safe work space where the tenant can complete the project? How should construction debris be disposed of, and who will be responsible? Be sure the tenant is also observing any quiet hours.
As the owner, you should be keeping tabs on any work being performed in your property. Ensure that you are keeping tabs on all required permitting and documentation. Schedule progress checks to be sure the quality of the workmanship is satisfactory. Of course, don’t allow a tenant to perform dangerous jobs, or tinker with electricity or other hazardous tasks unless they are licensed to do so. At the end of the day, you are the one responsible for your unit. Any work done on your unit will probably outlast your renter’s tenancy, so keep a sharp eye out for work that will withstand many years of use.