Tenant has multiple requests - Posted by Michael

Real Estate Investing
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Posted by Sean on September 13, 2005 at 08:42:33:

Lets see, they are paying for all that stuff… but he is paying somewhere closing in on $1000 in 3 months for stuff for them? Sounds to me, with all the money they are having Mr. Landlord spend improving their property every month, they have all sorts of money left over to pay for extras…

Sorry, been burned too many times. They want to have improvements done, they are welcome to do them… and maybe I’ll kick in half… Maybe. But this particular landlord is looking at a money losing tenant as month after month he does more and more work to the property…

I don’t know about you… but I’m in the business of MAKING money. Not losing money every month, but saying to myself in consolation… well at least they pay their rent on time.

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Tenant has multiple requests - Posted by Michael

Posted by Michael on September 11, 2005 at 09:57:27:

I have had a tenant in a newly remodeled home for the last 2 months. So far all is very good, they are in their late 50s and plan on staying here for 20 years as they love the home so much. They pay all utilities, and lawn maintenance fees. They even asked me if it was ok to have chemlawn treat the lawn, and paid for it. Background search passed, and we do direct deposit every month. We currently have a 2 year lease. I would say that I have very good tenants.

As I am new at managing a property, I need some assistance with their requests as I do want to be fair, but also not giving things away:

Asked for a garage door opener. I had one installed ($325) and raised the rent $25/month. But I locked the monthly rental with no increase for their 2 year term.

Asked for a garbage disposer. I installed one, my cost. Shortly afterwards the lines plugged up, had that snaked my costs as there is no way to tell if the plug was existing or not, so I didn’t even question it. If it happens again, then I will suspect misuse of the disposer.

They now would like a storm door installed on the front door. Installed this will run about $200 - $225. They say that this will be their last request.

I asked them how they would like to work it out, they threw it back in my court, they would like me to cover costs.

Many of you landlords have surely come across a similiar circumstance. One solution I am approaching is to cover the costs of the door, but rewrite the lease to a 3 or 4 year (with a rental increase included), but written in a way that protects the landlord if something comes up.

Advice?

Thanks, Michael

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Re: Tenant has multiple requests - Posted by Don (VA)

Posted by Don (VA) on September 13, 2005 at 12:49:39:

You’ve got to put your foot down. Yes, as the other comments say, you want to keep your tenants happy. But they moved in just two months ago? They didn’t notice there wasn’t a garbage disposal, or a garage door opener, or a storm door? Those are issues that really should have come up when they were applying to rent. Sounds like a pattern; next month it’ll be something else, despite their promise that it’ll be their last request. And you’ve helped set that pattern. They’re now in charge.

As everyone else has said, a longer lease benefits the tenants, not you.

What I want from my rental properties is no hassles, just a check every month. Sure, that’s the ideal, but I really do expect the tenants to handle stuff themselves and bother me as little as possible. When there’s a problem, I try to be a responsive and quick and possible. But it would drive me crazy to have new tenants in a newly remodeled home calling me every couple of weeks asking for hundreds of dollars in improvements.

At this point, the storm door is your call. I might do it just to get them to repeat, “This is the last request.” In any case, I’d remind them that we have a lease and it doesn’t provide for such improvements…that I hope they continue to rent from me…and that if they wish further improvements, per the conditions of the lease (for instance), they are responsible for any costs, landlord must approve improvements, and the property must be restored to its pre-improved condition upon move-out.

You can usually negotiate to purchase the improvements at a reduced rate. My last tenants in one property did that; they put up window coverings. We decided to retain some and paid a negotiated price for them; we decided we didn’t want the others and the tenants removed them.

Our current tenants have two dogs. The house wasn’t fenced in; they wanted to fence it. (Discussion was during the lease negotiation.) We said fine, you pay, we approve design. (We didn’t want chain link.) They were fine with that; they were having trouble finding a place that would take their pets. So, it helps to negotiate these things up front.

Hope that helps.

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Re: Tenant has multiple requests - Posted by Frank Chin

Posted by Frank Chin on September 13, 2005 at 07:02:51:

Michael:

You got a difficult choice, and many opinions. My observations:

  1. A lease ties the hands of the landlord more than the tenant. If you write a four year lease:

a… You’ll just can’t get rid of him if he becomes of pain in the @ss, or worst.
b… The tenant can give you an excuse, move anytime, even out of state, and you’re left holding the bag.
c… If you for any reason want to sell the place, the lease will put you at a disadvantage.

  1. I’ve had many case where tenant asked me to provide things, and thru the years, I’ve BOTH said YES and NO. The outcomes:

a… A tenant, retired school teacher, that started off nice, asked for a number of small things, then asked for installation of grab bars so she can easily come out of the bathtub. We countered with us paying for a portable type, or she pays part of the installation. She said NO, and left at the end of the lease.

b… We have one rental that comes with everything, washer, dryer, AC, fridge, dishwasher etc. Since its not cost effective to replace then all upon every turnover, we rent them out as is, and we had tenants ask to replace them with a new ones. We have to be very careful HOW WE ANSWER this. When we say “NO, go get your own”, we had people taking it with them under the theory that what they got was GARBAGE, and they’re doing us a favor disposing it, and they got a RCEIPT to show the judge for THEIR new appliance.

Our current tenant, who moved in last year discussed replacing ALL of the stuff, and the fridge, dishwasher, washer, dryer, AC, we agreed, so all were bought new three months ago. We agreed to pay for two of them, and the understanding was ALL the stuff stays. Why did we do this??

Well, the fridge dated from 1981, and we held off replacing it, hoping to make it thru another rental.

The washer and dryer was purchased by another tenant replacing seven year old models we had. We weren’t clear when these were replaced as the tenant said “the ones you got isn’t working right, so I’ll replace them”. What happened?? When this guy moved he said “how much do you want to pay for these as I’m thinking of moving them to my new home”. So we paid him about $150.00 for them, or else we had to replace them with BRAND NEW ones.

As to the diswasher, it was around 20 years old when we did the rehah back in 1983. Since it might be replaced when the place gets updated again, I threw it in, so there’a ALL new appliances if these people leave next year.

Which reminds me that I should put something in the renewal lease that all the stuff stays.

c… Another popular request is for ceiling fans and I actually said NO to TWO different tenants. In one case, the guy replaced it with a cheapo fixture after I said NO to buying the fan on his moveout. Another guy asked me to buy the fans in FOUR different rooms where he installed it, and when I said NO, he took them all with him, and left four rooms with wires sticking out of the ceiling where the fixtures were. What did we do here??

We did nothing, as he didn’t pay the last three months rent, and we only got 1-1/2 month security. While he moved to a new home, in the same county, we decided not to sue him.

That said we also had tenants putting in new ceiling fans, left them there, and I rented the place out to the next tenant. So you win some, you lose some.

d… Another guy said the roof antennae needs to by upgraded, and when I declined to pay for it, he got his own. But when he left, he not only took it with him, but we found that he broke a roof vent when he installed it. Unfortuantely, I told the new tenant the place comes with the antennae (I didn’t check the roof on moveout - who does??) so I hired someone to install one, and had a roof repair done. Was it wise to say NO?? Hard to say here.

Conclusions.

In your case, I would offer to pay half, and tell him “NO MORE”. Knowing tenant’s logic, if I said NO, the guy would probably say of moveout “how about paying for this door”?? “Oh you’re not”?? You’ll find the door gone, and screw holds where the door used to be. And the new tenants would say “Oh there used to be a door here”?? Are you going to leave it like this"??

Frank Chin

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Re: Tenant has multiple requests - Posted by eric-fl

Posted by eric-fl on September 12, 2005 at 14:49:36:

How many $200-$400 upgrades per month will it take on this house before it turns into a negative cash-flow?

Conversely, how much less troublesome of tenants could you get on this property, were you to remarket it at $200 less per month?

Bottom line is, in spite of their promises about the future (which are useless, of course), right now, they are costing you money.

Were it me, I would try to turn the situation around, and propose to them a lease/option or owner-financing type of arrangement.

Simply say something to the effect that, it seems like they really like the home, and they want to stay a long time, and do upgrades, etc. And that’s great! So, if that’s the case, then why continue just throwing good money after bad on rent?

Instead, why not build equity NOW, towards a purchase in the FUTURE, so they can be BUILDING something, and let THEM get some of the return back on these upgrades and improvements, rather than just you…

In other words, turn it around, and put the impetus on them. Most tenants who really do intend to stay for years would jump at the chance of building equity into a possible future purchase.

Of course, I have little doubt that they are NOT serious about this, and just taking advantage of your good nature. In which case, this will be a good test and screening mechanism to see if that’s true or not. If (when) they turn down your generous offer… remember that next time they ask for an upgrade, and nothing in return except a promise.

Also, remember that your lease defines the relationship with your tenant, and nothing else. Unless you put something in writing to the effect that you will do free upgrades every month, you don’t owe them that. What you DO owe them is to keep the property maintained in the same condition as when they leased it, and what they owe you is the rent every month, and to keep the place clean. Simple. So keep it that way, and don’t overcomplicate things.

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Be careful - Posted by FrankIL

Posted by FrankIL on September 12, 2005 at 10:07:41:

Michael - you seem like a nice guy but because of that you’re being walked all over. You try to justify all these additions by telling yourself these tenants will stay for 20 years and how wonderful they have been. And I’m assuming you’re afraid what will happen if they left. You can’t operate a business this way and believe me fixing the door will not be their last request. They’ve already learned that if they ask for something you will gladly put it in…and pay for all of it.

My suggestion - you tell them nicely that you have already spent your budget for the year on the other items they have requested so the door will either need to be paid for by them or they will have to wait for another time (i.e. like a year or two from now). You need a way to politely cut off the requests.

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Sheesh - Posted by Mark(SDCA)

Posted by Mark(SDCA) on September 12, 2005 at 09:46:05:

You are being a little picayune about your rental. The one thing I would say is optional is the storm door.

In this day and age who doesn’t expect a garbage disposal and garage door opener in a house. You need to remember that the tenants are YOUR customers. If they are good tenants as you say, you should do ALL of these. A 20 year tenant is an absolute GOLDMINE!!

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Re: Tenant has multiple requests - Posted by Sean

Posted by Sean on September 12, 2005 at 07:31:17:

Tenants are always going to want you to cover costs of everything… By caving on one request, they will ask for another… and another and another… generally speaking.

Tenants are like children… they will try to get away with whatever they can. The old, give them an inch, they will take a mile.

If there is an existing and functional screen door on the property there is no reason to update it… if there isn’t, they knew there wasn’t when they rented the place.

I generally allow tenants to do upgrades to properties themselves if they wish, but unless they have been my tenant for a long long time, and paid well every month consistently… asks for improvements by me that are not safety or health issues are not going to be done by me.

If they plan on being their “20 years” (snicker) as they claim, they should have no issue buying a garbage disposal for $50 or a storm door installed for a few hundred if they want them.

I have split the cost of upgrades with tenants from time to time, if I know they were going to be long term benefits for me once they moved out… like tenant who had electric dryer, but hookups were only gas… we split the 220 line run cost, because now I have an apartment that will support either type for the rest of its life.

In general though, they want improvements, that are not neccessities, its on them to do them. And garbage disposals are nearly ALWAYS more trouble than they are worth… now that you paid to install it, you are going to be responsible for it every time it doesn’t work… same thing with the garage door opener.

You have already set bad boundaries by yielding completely on 2 upgrades… now you are setting a pattern of behavior that is going to be difficult to break.

Long term tenants prove themselves first… huslers tell you up front they are planning long term occupancy and are delinquent in 6 months… I just don’t buy any line from a straight tenant saying they want to be long term.

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No Good Deed Goes Unpunished - Posted by Mike-OH

Posted by Mike-OH on September 12, 2005 at 06:54:48:

NO GOOD DEED GOES UNPUNISHED! That’s the lesson that you’re about to learn - ask me how I know! Almost every time that I’ve done something nice for the tenants, I get screwed. As a recent example, a tenant wanted to paint the kitchen and wanted me to provide the paint. I did and the very next month they spent their rent money on a vicious dog. Needless to say, they’re living elsewhere at this point.

So, my suggestion is stick to the lease. If they want something extra, make them pay to put it in. Absolutely insist that the contract is followed to the letter. Get rid of bad tenants immediately. There’s no place in REI for emotion or kindness - IT’S A BUSINESS!

Good Luck,

Mike

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When you look at tenants, see $$$$$ - Posted by Craig

Posted by Craig on September 11, 2005 at 20:05:22:

Jeff Taylor (everbody knows Jeff Taylor–right?) says to look at tenants as money in the bank. That is, if you do it right. That is, if you checked ther credit and LL references, etc. There are bad tenants who want the LL to do everything for nothing and turn around and leave without paying. But good tenants–according to Jeff Taylor–are money in the bank for you if you handle them right.

You want good tenants to be happy tenants. If good tenants are not happy tenants, they will leave you–you lose good tennants. With good tenants, every request they make should mean more money for you. If you can find a way to increase cash flow, then, by all means. . . $$$

If tenants ask for something, YOU CAN make it work providing THEY PAY. For example, if tenant wants unusual paint, agree to it for the price of the job plus the price of repainting when they leave. You can do this with any combination of: (1) Increased deposit (2) increased monthly payments, (3) increase the lenght of the lease (so that you will collect enough over time get to keep good tenants at a higher rent rate longer), and/or (4) a one-time, nonrefundable fee. It’s possible also to later refund some of the deposit after the tenants have paid more, say in increased monthly payments. All sorts of posibilities.

They key is (1) to make more money and (2) not loose any. If you have good tenants you want to do things that will KEEP THEM AS GOOD IF NOT BETTER TENANTS, AND KEEP THE IN THE UNIT LONGER. The more they are willing to spend, the more investment they have in the unit, should take better care of it, stay longer, etc. The more you do to make the unit appeal to them, the less they can find another unit in the area that would suit their taste.

You want these tenants to keep calling you. Everytime they think of something, you want them to call you, not somebody else. Theey need a fax machine. Sure you can put one in the unit for them. It’ll cost them X down and Y per month, and after Z payments it will be their’s.

They want a second or third color TV? Sure. . .$$$
They want better carpet? Sure. . . . $$$
They want a tiled entryway? Sure . . . . $$$
They want indoor heating operating on timers? Sure. . . . $$$
You can tell them that they have one of your “preminum” units and are one of your “premuium” tenants.

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Re: Tenant has multiple requests - Posted by RichV(FL)

Posted by RichV(FL) on September 11, 2005 at 17:56:02:

Michael,

I do like the idea of keeping a good tenant happy and keeping cash flow rolling in. But if you keep doing all of these fix ups that positive cash flow can soon become negative.

Put your foot down. Dont pump so much into this property. It can soon turn into an alligator on you if you let it.

Always remember these two things when it comes to landlording…

  1. You are in charge and the tenant is not.
  2. Landlording is a “for profit” business, nothing more nothing less.

I know I sound a bit hard but there comes a time that you have to be fair but firm…and in my opinion you have been more than fair.

Great Success,

RichV(FL)

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Re: Tenant has multiple requests - Posted by cathleen(TX)

Posted by cathleen(TX) on September 11, 2005 at 16:29:58:

Didnt have a chance to read all prior responses so forgive me if this is redundant. My thoughts are if it ultimately will benefit future tenants and it is not too “out there” (i.e. Green walls, or, price wise top-of-the-line) I say, go for it because it makes your good tenant happy and it makes an improvement to the comfort and livability of your property. Best of Luck!

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Re: Tenant has multiple requests - Posted by Tim

Posted by Tim on September 11, 2005 at 15:36:11:

Congratulations on your new rental property. I believe you are getting some good education and experience from dealing with your new tenants.

Your post reminds me of my first rental about ten years ago. My tenant commented about how nice a shed would be, as well as storm doors in the front and back. I was so eager to improve my new purchase that I quickly built the shed and installed the storm doors. As a bonus, I painted the entire exterior my tenant’s favorite color. I made it look really nice. I was sure that I had won over my new tenant for life!!!

She moved away six months later due to her work.

I don’t have any complaints because the next tenants paid more for rent, and I was proud of my work. Having said that, you can spend a lot of money making the property really nice for the tenants. You can also pinch your pennies and save the $$$ for the next property. There’s an optimal amount of work and money you should expend to receive the maximum amount of goodwill from your current and future tenants. Experience will help you to determine where that level is. I’d say that at best, you’ve bent over backwards for your tenant. They should be grateful, however, it is possible that they will keep asking for things, and the first time you say “NO”, you will be treated to some rudeness and complaining. At that moment, it will have become obvious that you had gained not one bit of goodwill for all of your efforts. I’m speaking from experience on this one. If they don’t appreciate it, it will become apparent to you as time passes.

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Re: Tenant has multiple requests - Posted by phil fernandez

Posted by phil fernandez on September 11, 2005 at 15:00:58:

Your tenants told you that “this will be their last request.” Highly doubtful that this will be the last one. They will keep on asking as long as you keep on producing goodies for them on your nickel. Put your foot down. Sounds like they are making a game of this.

As far as leases for more than a year, I don’t like them. How can you know now what your operating expenses and rental market are going to look like two to four years down the road. It’s impossible. You may have a nice cash flowing rental now that could turn into a negative cash flow situation by being locked into a long term lease.

Also as someone else said, the tenant will move when they want whether you have a lease or not. Whether it’s a one year lease or a four year lease.

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Re: Tenant has multiple requests - Posted by requests

Posted by requests on September 11, 2005 at 13:45:25:

Before you go signing them up for an additional 2 years when you only have had them for 2 months, it might be smarter to actually see how they are going to be as tenants by experiencing them for at least one full year.

Already they are causing you stress. Are you sure that things will get better over time or is that just a hope of yours? Although they have done nothing wrong so far, if they are that capable of pushing your buttons already, I’d be a bit careful.

I agree with Sailor. I prefer the month-to-month program also. (Although when rents are squishy I will ask for a 6 month initial lease before it converts to a month-to-month) The sad fact is, tenants will leave when they want to leave. Sure, you can take their deposit and make them pay rent until another tenant rents the place. However that is not worth the valuable choice I have to raise the rents or change the rules whenever I want with only a 30 day notice. In fact I have been able to use those options to get rid of poor tenants when needed. But if they remain good tenants, you might sign them up on a year-to-year basis, allowing you to raise the rent/change the terms on a regular basis if needed. If you put in a clause that states you automatically raise the rent each year due to typical tax increases, inflation, improvements, etc., lease or no lease, a lease will probably become less important to them.

I think adding improvements for tenants is a good thing. Tenants who want to improve the place are tops in my book. However, I have my limits. After doing a couple things I’d be likely to say that’s all for this year, folks. You’ll have to wait until next year for that or else do it at your own expense - keeping it friendly, of course, telling them I have a budget to follow. I don’t mind improving my property if I can afford it and I like pleasing my good tenants if possible.

As far as fixing things, I put in my agreements that the tenant is responsible for fixing clogged drains, toilets, broken washers, dryers, dishwashers, broken windows, etc. If the furnace or water heater or roof has problems, only then do they need to call me. You get the idea. I also put in an annual inspection clause.

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Re: Tenant has multiple requests - Posted by Jonathan Rexford

Posted by Jonathan Rexford on September 11, 2005 at 13:09:02:

Personally I would have stopped at the Garage Door Opener. Even though it increased your cashflow. The tenants could have made this expense themselves with your approval and you could have gotten a free garage opener.

Same with the other requests. We have tenants and lease option buyers all the time put on decks and add stuff. I do one year leases and a longer option period but my rental rates are only fixed for one year.

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Re: Tenant has multiple requests - Posted by Anne_ND

Posted by Anne_ND on September 11, 2005 at 12:26:34:

Hi Michael,

Welcome to the wonderful world of landlording. In this world, you are the dog, and the tenant is the tail. You should be wagging the tail, not the other way around.

What does your lease say? That’s the document that should determine your course of action.

My suggestion is that you put on the storm door in return for re-writing the lease. That way you give a little, and they give a little. In the new lease (make it 12 months, with a built-in rental increase) make sure it’s clear that they understand that they are responsible for all plumbing issues, including stopped-up toilets in the middle of the night and the garbage disposal. You will also not be making any further improvements to the property unless it’s something you want to do.

I agree with Tye- the landlord does not benefit from a long-term lease.

good luck,

Anne

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Re: Tenant has multiple requests-Disagree - Posted by Sailor

Posted by Sailor on September 11, 2005 at 10:11:49:

Sorry to disagree, but I think you ARE giving away things. I just gifted an ill tenant w/a Cadbury chocolate bar because he had suffered w/an A/C problem. My cost was $1.59 + tax (Wal-Mart is a 60 mi trip). My tenant may be happier than yours, kid.

On extending the lease–I’ve always felt that leases tie up the landlord, not the tenant, so never give one unless the tenants needs it to feel secure. Time w/tell for sure if these particular tenants are keepers, but my feeling is that these folks are unlikely to stop making expensive requests. Sounds like they’ve been honing their “gimmee” skills over the years. Are you absolutely sure you want them in your life for the next 3-4 years?

Tye

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Re: Tenant has multiple requests - Posted by MikeT_Ca

Posted by MikeT_Ca on September 11, 2005 at 10:07:47:

Hi Michael,

I just had the same thing happen to me. I had a lease option in place with a tenant buyer. They were not able to excecute the option for lack of funds needed to close.

They asked if they could just become regular tenants, I said sure, and they signed a 12 month lease.

They had two requests a garage door opener and a security door.

I gladly intalled both and paid out of my pocket. I did not raise the rent or work anything into the lease. I would rather have a good happy tenant in the house.

-Mike

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Re: Be careful - Posted by Jim FL

Posted by Jim FL on September 12, 2005 at 17:03:42:

Frank,
Good comments and ideas.
However, I’d remove the part where the landlord tells the tenant that they have ‘spent this years budget’ on the rental.
Why?
Because next year, they’ll ask for more things, and say, “but last year you said the budget was $xxxx, and these requests are less than that.”
Not that it really matters what a tenant says, but no sense helping them along in their thinking.

I’d just cut them off, and say, “look, I really am happy with our arrangement, and wanted to accomodate you to help us maintain a good long term relationship, BUT, I cannot keep pouring money into this house on unneccessary items and not be forced to sell it.”
Then stick with the written agreement from there on out, and perhaps throw them a small gift here and there at holidays etc if they continue to pay on time and otherwise peform."

Anyway, just my two cents, keep the change,
Jim FL