Tenant wanting to renovate Garage?

From: Manny B


Howdy there,

my tenant just asked me whether he could renovate a single garage at their own expense, basically line it internally (it only has timber frames inside & can see the roof), put a floor down (as it currently has road base), take electricity to it, paint it, etc... at his own expense... only catch is that he would like a friend of his that has no $$$ to move in, as he would like to help him out (the house is only a 2 bedder & the tenants being 2 brothers occupy each of the bedrooms)...

I told the tenant that I would get back to them tomorrow if I was to allow them to go ahead... any suggestions?

Do I just let them do it (the tenant is a carpenter/painter & would do the bulk of the work & the person wanting to occupy the garage is an electrician) as they would be improving the house? Any implication for having a person in the garage? Do I ask for more rent?

Any help would be greatly appreciated...

Cheers,

Manny.
 
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Reply: 1
From: .watto .


Hi Manny,

Most councils don't allow sheds or garages to be converted to living space. They are considered as unhabitable areas.

Not sure of any potential legal issues with letting tenants do the above may need some more input from others....


Cheers
Watto
Melb Freestyler
 
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Reply: 2
From: Thorpey !


This sort of thing can be of great advantage, but to be sure,if it was me.....

I would be asking the tenant about length of term and also an increase in rent, even though they may have "improved" your property. (they may scarper anytime)
Will it be an improvement that fits in with your overall plans for the property?
If so, what value do you assess it at?
Does this fit with the "deal" your tenant is looking for.
If so, why not, sounds like a win/win.
Just make sure it is!
Then all will be happy!
Due diligence rules.

Regards,
Thorpey!

"Better to have it and not want it, than to want it and not have it"
 
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Reply: 2.1
From: Robert Forward


Not to put a sour note on things but...

Lets look at it this way. The "friend" is down on his luck and no money (which is unfortunate), he may not be someone you will want living in your property.

If he has his own section of the house (be it the garage) what is to say that he will not move out when the others do. Will he start squatting in your property? As from what you've not said he will probably not be on the lease contract, if this is the case I'd say a BIG NO, politely though.

Next I'd check with your insurance company to see if they will cover the changes that will be required.

If you need an easy excuse for not allowing them to do change the garage, just tell them that the insurance will not cover it.

But mainly I'd be wanting more in the way of rent, but I'd be nice about it and give them 3-4 months notice, this should be enough time for them to help their friend get back onto his feet and start helping with paying the rent.

Cheers,
Robert

Get your Property Inspection Reports @
http://www.CreativeFinance.com.au
 
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Reply: 3
From: Michael Keleher


Manny....I have done this kind of thing twice. Once about 15 years ago and just a few months ago.
Both times were an absolute disaster.
The first lot decided ..as usual...they could not/would not pay the rent.After a little pressure from me they notified the local building inspector, health department and other agencies that I did'nt even know existed claiming that I had approved illegal and unsafe building works. The fact that they had begged me to let them have some imput into their "home" seemed to be forgotten.
Amazingly all of the above was soon forgotten 2 weeks later when I gave them $500 cash to vacate plus I paid for the moving van to take them as far away as possible. I changed the locks as soon as they were gone.
Just recently I put a property up for rental in a semi rural area on which I had spent about $50k on renovations.Blow me down but a beautiful young couple with 3 lovely toddlers and 1 on the way loved it but required a security fence above an embankment. Lucky me, the prospective tenant was very handy and a fencer mate who could do the job subject to a little cut in the rent. Hell , they also had top references from their previous agent.
But I declined the offer and built the fence myself and left the rent unchanged.
So they moved in and paid the first month late and it was all downhill from there.They ended up paying about 3 months rent over 6 months by the time I got them out.
Hey, they left a bonus for me though, a little dog left locked in the empty house. He was safe as there was enough food scraps on the floor to live for a few months.
The upshot of all this was $3500 in damage and 5 trailer loads of their rotting crap that I had to pay tip fees for.
Turns out..surprise...that they were de facto with all the kids to different fathers but none to dad in situ. They were also recipients of every welfare dodge available under multiple names..... hell they even left the evidence behind. How good of their previous agent to give a glowing reference.
The point of this example is if I had let this guy build the safety fence what are the chances of some poor little buggar coming to grief and some poor old landlord coming to grief as well.
 
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Reply: 3.1
From: Manny B


Thank you all for your suggestions, the feedback was greatly appreciated... what I intend to do is speak to my managing agent (as I haven't spoken to them about it yet) to get their opinion as well, but I think I will be saying no to the tenants for my protection (don't want any horror stories)...

Cheers,

Manny.
 
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Reply: 3.1.1
From: Manny B


Just to update you all...

I have said a BIG NO to the tenant, therefore not renovating the garage...

He did ask if they could bring in a caravan to the yard & have the mate stay over there for a short spell (till he gets himself on his feet)... I gave them permission on the proviso that the mate & caravan vacate within 3 months... (agent didn't like the idea of the garage, but were happy with the caravan)

I hope there are no major implications for them having the caravan in the yard for a 3 month spell?

Cheers,

Manny.
 
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Reply: 3.2
From: Michele B


On several occasions I've let my soft heart rule my business head and allowed tenants to make (seemingly) acceptable alterations or tend the garden, sometimes in return for a rent reduction. Never once has there been a happy ending. I now have it firmly fixed in my brain, mantra style, that there will be no building alts, gardens remain the responsibility of my gardeners and full rent will be payable always. I'm sure there are lots of well qualified and well-intentioned tenants out there but they don't come stamped with a guarantee.
 
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Reply: 3.2.1
From: J Parker


Michael K,

What a terrible story! I am now just beginning to experience late rental payments on a property I am self-managing so I know how it all starts.....

Some good advice I've read regarding references and past landlords is to get the tenant to give you the contact details of the last TWO landlords so that you can thoroughly check up on them. After all, if the tenants gave the last landlord a hard time he's going to want to get rid of them quick smart. It doesn't matter to him that you're going to be facing the same problems he did- he will give them glowing reports to get them out of his property! The previous landlord, however, has nothing to lose so that's where the truth will reveal itself!
Cheers, Jacque :)
 
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Reply: 3.1.1.1
From: Rosemary McKenzie


Hi Manny,

This sounds so familiar! Same request January this year "can we set up the garage" for a sister moving to town, till she gets a job, definitely less than 3 months.

We said no to the garage bit but okayed the caravan in the driveway (backyard vehicle access wasn't possible).

Only just spoke with them today. Sister is still in residence - wearing thin with them too - after a number of not being able to keep a job.

I did remind them that the lease covered 2 adults and 2 children at the property, and if they wanted they could add the weight of a mean landlord to encouraging the sister to move on.

I also reminded them that our policy was not to charge for excess water because we wanted the lawns and gardens maintained to a standard. Since we were now providing for 3 adults there was extra water and additional wear and tear on the property itself. They also have been reminded that a rent increase is due.

We have now been promised that worst case would be Xmas before she moves on (hopefully not moves "in") because the caravan is going permanently to their holiday location.

We shall see!
 
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Reply: 3.2.1.1
From: Boyler Room


Manny B,

Did you put that in writing?? (about caravan only and must vacate by a certain date.... being 3 months ... and of course date it)

These things can come back and haunt you. Putting it in writing is a bit of a crutch should it take that path.

Just a thought...

Boyler Room
Co Ordinator for ADL Freestylers
 
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