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Should I Allow Tenants to Make Unit Upgrades?

Every now and then, a tenant offers to make repairs to the unit he’s living in. Often, such offers are made in exchange for rent (in other words, the cost of the repairs is deducted from the monthly rental rate). In other instances, the tenant simply wants certain upgrades in his unit (a new paint job, removed carpet, etc.) and offers to do them himself. The argument for this is that the tenant can enjoy a place that “feels like home” and you reap the rewards of these upgrades once the tenant vacates the unit.

Clearly, there can be benefits to this sort of situation: You receive property upgrades at a reduced (or negated) cost, and your tenant gets to customize the unit to his own preferences. Unfortunately, though, there can also be some pitfalls. All too often in these scenarios, tenants are not qualified to complete these upgrades or updates up to par. The result is unfinished or sub par work that ultimately becomes your responsibility to rectify.

Not only this, but such deals can also result in sticky financial situations and—in extreme situations—legal problems. Let’s say that one of your long-time tenants wants to repaint his living room from the standard white all of your units are painted in to a more colorful rustic red. You agree that the color would suit the space well and tell your tenant can deduct the price of paint and labor from his next rent payment.

When the first of the next month rolls around, the tenant presents you with a painting bill that accounts for most of his monthly rent. You ask to check out the living room and find that not only is the paint a much different shade of red than you had anticipated, but also the painting has been shoddily done. It’s uneven, red paint runs over the edges and is splashed on the white ceiling, and has also splattered over the carpet. Clearly, this is not what you bargained for, but your tenant argues that you agreed he could deduct painting costs from rent. You are now faced with either battling over rent money with your tenant or eating the cost to keep the tenant happy. Not only this, but you have lost money because you will have to repaint and re-carpet for the next tenant once this one vacates the unit.

Unfortunately, situations like this occur frequently when tenants take on repairs and upgrades themselves, no matter how good both of your intentions are. While it’s true that some of your tenants may be perfectly capable of taking on repairs and upgrades themselves, this is not a skill you can identify simply by how responsible your tenant is in other areas.

With all of this in mind, even if some tenants are perfectly capable of taking care of upgrades, you are best to make an across-the-board rule to avoid conflicts with all tenants: Repairs and upgrades can only be completed by licensed contractors at your discretion.

You do want tenants to feel at home, though. This is one of the ways that you keep long-term, desirable tenants. So when tenants come to you with this sort of request, make sure you let them know that you understand why they would like this upgrade but that, unfortunately, your contract does not allow for tenants to alter units, whether it’s paid for through a rent break or is free. If you do feel that the upgrade is viable (for example, a tenant in a particularly hot apartment wants to install ceiling fans), consider hiring a contractor to do the work the right way at some point in the near future. It may cost you more up front, but you can rest assured that the work will be done correctly and your good relationship with your tenant will remain intact.

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Maybe the question should be reframed as, "Will allowing my tenants to make unit upgrades give my community a marketing edge over other communities?"

  Becky / @ecomod
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I see that as a separate question. There's a difference between allowing tenants who approach you to make unit upgrades and actively marketing the fact that you allow tenants to make upgrades.

  Buildium LLC
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I've had this happen so many times to landlords who had me take over their management. The horror stories are endless unfortunately. In one of my first cases, I took over and the owner had rented to a long time family friend who agreed to do all kinds of work in exchange for NOT paying a deposit. As I was evicting her for a long list of things, she tried to cite in habitability because she NEVER did all those things SHE had promised to do at her move in some 4 years earlier. I simply thank the tenant for their offer and if the repair is needed, I make it happen. I never let them do it.


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