Requests from tenants - built in

[tez]

Hi everyone,

I just had a new tenant move into my unit. She has made a couple of requests and I just want an opinion as to whether what I propose is reasonable.

The tenants has request for a curtain rod to be installed in the bathroom and a built in wardrobe to a bedroom (2 bedroom place).

The curtain rod is something I dont mind doing. The built in I also dont mind doing, HOWEVER I wont be footing the whole bill.

For the built in, I was going to respond to my agent and say that I will pay half the cost (approx $300 - $350) provided the built in stays when she moves out.
I'd prefer to do it this way than to raise the rent say $10 per week as it would take over a year to get that back.

What are your thoughts?

 

[twobobsworth]

I probably wouldn't do either. I'm sure they inspected the property before signing the lease.

 

[Perp]

Tez, I think you're looking at this all wrong!

The thing that you seem to have lost sight of is that a built-in wardrobe is a modest, but real, capital improvement to your property. It would be different if they asked for something that adds no value, such as - I don't know - a different light fitting or something. But a built-in wardrobe will increase the value of your property by at least the $700 that you suggest it will cost. Let's say that it increases the value of your property by $2K (which I think it would in most areas). You are probably getting about a 4% yield on your investment, so by adding this amenity your rent could reasonably go up by 4% x $2K per year = $80 per year, or $1.54 per week.

And you can depreciate the cost of installing the wardrobe, meaning you'll get a few hundred bucks back over the coming years in depreciation benefits.

I think that you either view the $700 cost as the good investment that I think it is in your property, and absorb it - raise the rent $1 or $2 per week if you really feel compelled - or you refuse to do it.

But I don't think that asking the tenant to contribute to the cost of a capital improvement that you insist must stay is remotely just - and possibly not even legal! And I think $10 per week would be grossly disproportionate.

 

[handyandy]

Its just the start of many and endless requests.

She inspected the property and was aware what was included for the rent to be charged. If she wanted these items included she should have requested them prior to signing the lease in which case they could have been negotiated.

Cheers

 

[pulse]

I agree with the handyandy, the requests will keep coming... some tenants accept a place for what it is, others keep wanting to change it to what they wanted...

She won't be the first person to buy cheap wardrobes from fantastic furniture..

Pulse

 

[Peter_Tersteeg]

Offer to put the wardrobe in for an extra $5 - $10 per week. Otherwise decline the request becuase it'll only be the first on many.

 

[wylie]

I would be inclined to refuse the request but definitely consider installing a wardrobe when YOU are ready to do so. We try to do things at the end of tenancies and then we can charge more for the next lot because of the improvement.

Personally, if I was paying for built-ins I would want to do it properly, which costs a bit more than something that may look "jack built" and doing things properly tends to cost more.

I agree it will add to the value, but I don't like being painted into a corner by tenants (or anyone else for that matter) and feeling like I have been suckered.

Surely she can buy a cheap and cheerful $100 wardrobe just like everybody else?

 

[Xenia]

You are under no obligation to put in BIR's just because the tenant said so. I would either decline the offer or use it as a negotiation to up the rent.

I would not allow a tenant to pay half costs, it could get messy later at a tribunal hearing if they are demanding their money back!

 

[redsquash]

Find out how much extra she would be prepard to pay, given that she was under no obligation to rent , what you had on the market.
.
My guess is she wont want to pay anything extra .
That being the case why bother to do anything.

Any addtional change in what you provide should be accompanied by addtional rental charges

 

[Bushy]

I would put it in if the tenant agreed to up the rent by $10 per week. Its win / win
Use your LOC to pay for costs.
Your interest costs on LOC are $56 per yr. (that are tax deductable)
Your cashflow now increases by around $460 per yr ( excluding PM costs)
You can claim depreciation - (that is tax deductable)
Your borrowing capacity has improved which will let you borrow an extra 5k.( assuming 80% of rent for servicability and 8% interest costs)
The value of your property has increased (more security for more borrowings)
It will be easier to get another tenant in the future

And the best part is, The tenant thinks you are a great Landlord.

Look at the numbers to make a decision. I would only install if the rent went up.

Regards Bushy

 

[HandyAndy888]

A tenant can request anything, lets say I request that you install a pool, yeah it adds value, but come on....

Curtain rod is a whatever, wardrobe is up to you...I can definitely tell you that when you're sick of her requests, it will be easier to rent the next time...

 

[Perp]

Whoa! Just when I was thinking that I'd found a group of like-minded people, most of you surprise me! That's OK, life's interesting...

I've had my share of good and "more demanding" tenants, but why would so many of you assume that this is "the thin edge of the wedge"? Why so much negativity towards a new tenant, whose requests don't seem that outrageous to me? Isn't spending $700 - which really is just a further investment, not an expense, since it'll add at least that much value to your asset - a "win-win" proposal? Wouldn't it make your new tenant happy and thus likely to stay longer? Won't it make your place more appealing to the next tenant?

I hear the whole "that's how it was when they rented it" argument; but when you bought or rented your home - which you bought/rented in that condition - didn't you find lots of little things that you wanted to change after you moved in and lived in it? Don't lose sight of the fact that your IP is their home. If there are some small things that we can do to make tenants feel more emotionally invested in the property, I think that's a "win-win". And at less than 0.2% of the value of a $400K property, $700 is certainly a "small thing". (Though I agree with Wylie that unless this is a very low end property it should be done properly and probably will cost more like $1-2K.)

The tenant has control of my asset worth several hundreds of thousands of dollars; I want them to be happy, to like their home, and to feel that I'm an accommodating landlord and thus that they want to take good care of my asset! If they start making ridiculous requests, then of course my tune changes, but I always start off assuming that we're both reasonable people.

I guess my view may be influenced by the fact that I'm not primarily a cashflow investor, and that I have $700 to spare, but I must say I was really surprised by all your responses! If you have such a low view of your tenants, why would you invest in residential property? Or are you bitter and twisted by your experiences?

I love Somersoft - you're always learning...

 

[lizzie]

I've had my share of good and "more demanding" tenants, but why would so many of you assume that this is "the thin edge of the wedge"?

because we've been there done that and know the pattern ... i'm with the majority. install only if the tenant agrees to up the rent.

otherwise they can go out and buy a cheap wardrobe, or even cheaper hanging bar.

p.s. ozperp - any chance of changing your font to the standard one? the font you've currently using is very hard to read as is smaller and more squashed up.

 

[Dis]

The curtain rod is something I dont mind doing. The built in I also dont mind doing, HOWEVER I wont be footing the whole bill.

My approach would be quite the opposite. I would not install the curtain rod because it does absolutely nothing to increase the rental appeal or rent of the property (except on the off change the bathroom window is clear glass). It is essentially a request of a personal nature. The rod may be of low value, but I don't do my own repairs so the handyman will probably bring the total cost close to $100. I would state the tenant may install one at his/her own cost provided that
a) You choose the make and model so it does not clash with the rest of the foxtures
b) The tenant eaither leaves it behind at the end of tenancy or if he/she remaves it, then any damage must be made good (returned to orginal condition)

The BIR, as others have said, will improve your property and add appeal. If I intented to install one at some stage, now would be a good time. If you had already decided against it, well off course decline the request. I would not decline it simply on principle. I would not try to charge extra until the next rental review. If you feel strongly that the tenant should not benefit from the BIR if rent cant be increased, you can always say that you are currently not in a position to fund it and the request will be reconsidered in a few months. By the time you revisit the issue, get a few quotes, and itstall it; it will almost be time to increase the rent anyway!

My biggest concern re: BIR would be whether it restricts the options in the bedroom. From memory a 4X3.5m room can comfortably accomodate a BIR and still house a double bed. A 3 X 3.5m room will either be limited to a single bed or will looked very cramped with a double. In my property I therefore only put BIR in the larger bedroom.

 

[alexlee]

Whoa! Just when I was thinking that I'd found a group of like-minded people, most of you surprise me! That's OK, life's interesting...

We’re all investors. That doesn’t mean we will agree on everything to do with property investment.

I've had my share of good and "more demanding" tenants, but why would so many of you assume that this is "the thin edge of the wedge"? Why so much negativity towards a new tenant, whose requests don't seem that outrageous to me? Isn't spending $700 - which really is just a further investment, not an expense, since it'll add at least that much value to your asset - a "win-win" proposal? Wouldn't it make your new tenant happy and thus likely to stay longer? Won't it make your place more appealing to the next tenant?

Experience with reality, probably. Is it an investment? Will someone come in and pay you because the place has built ins? I may if it’s a nice built in.

I guess my view may be influenced by the fact that I'm not primarily a cashflow investor, and that I have $700 to spare, but I must say I was really surprised by all your responses! If you have such a low view of your tenants, why would you invest in residential property? Or are you bitter and twisted by your experiences?

Tenants are a necessary evil of property investing. They’re there because I need money to pay the bank.
Alex

 

[Ausprop]

The tenant has control of my asset worth several hundreds of thousands of dollars; I want them to be happy, to like their home, and to feel that I'm an accommodating landlord and thus that they want to take good care of my asset! If they start making ridiculous requests, then of course my tune changes, but I always start off assuming that we're both reasonable people.

this paragraph sums up a whole host of probelms for IP investment...

you are right that for very minimal amounts a tenant has control of your asset worth several hundred thou and in the eyes of the law they can do no wrong. so... in such a tenuous position do you risk upsetting them for a sake of a curtain rod and wardrobe? is providing it showing weakness (sadly you are not in a strong position anyway)?

your assumption of people being reasonable is refreshing however I suspect you will be let down on many occasions

 

[lizzie]

We’re all investors. That doesn’t mean we will agree on everything to do with property investment.

Alex

also need to remember that property investing is a business and needs to be treated as such. try and keep any emotion to the side (except when cracking that wine after a purchase).

if you want to install a robe because "you" want to, it will add value to your property and improve your business cashflow out of the property - then install one. don't install just because the "tenant" asked for it.

many of us have given the tenants an inch, and they've taken a mile. a new robe suddenly turns into a request for a new stove, turns into a request for new towel rails, turns into ...

we invest in this type of product because we like the product and it's flexibility/ability - we do like our tenants to be happy, because happy tenants stay on and look after the property - doesn't mean we invest to supply tenants with whatever they desire, with no benefit to ourselves. if they want to renovate a home to their own standards, then save a deposit and buy - don't be spending my money to do such (unless it's of great benefit to me).

selfish huh!

 

[skater]

Like the majority, I would not put in a wardrobe. Your property is a business, not a charity. They are paying $x for a rental with the facilites it currently has, if they want extra facilities, then they get charged extra rent.

 

[nomadic]

For the built in, I was going to respond to my agent and say that I will pay half the cost (approx $300 - $350) provided the built in stays when she moves out.
I'd prefer to do it this way than to raise the rent say $10 per week as it would take over a year to get that back.

What are your thoughts?

I would also ask them to go halves and let them know that it stays when they vacate. It will make her stay longer and will make your property more rentable when she vacates. But be firm about any other requests and let her know this is what she signed up for.

 

[caterpillar]

I am constantly surprised by the gall of the tenants! I have been a tenant, and it wouldn't have occurred to me to ask for BIR if the property didn't have them when I moved in!!

My tenant was in for one week before asking for
a) window locks
b) bolt on sliding door
c) front security door

Why don't they ask before moving in?! Now I don't want to get any of those things because I feel like a sucker giving in to the tenant!