Bad Tenants = Good Thing

[John Van Uytven]

*Sometimes things just work themselves out.*

I acquired a rental house recently from one of my friends.

Part of our deal is he gets to be a minor stakeholder in my company for some of his equity in his property.

My friend bought this house and lived in it and house hacked with it for about 7 years or so while he was at University.

We had talked about this deal before. The problem we ran into was he wanted to over rehab a house meant for college students to rent. Because it was his house and he had lived there for so long. 

When he moved away he put some tenants in the house to help pay down his mortgage and while he was attempting to sell the house. We kept our lines of communication open about me buying the house. Especially since it already had tenants living there. He was also having work done on the property to get it looking good.

We kept disagreeing about how nice he should make the place. 
I was worried that if we did do a partnership that he would always be wanting to buy the nicer fixtures for our rental houses meant for college students.

Then he changed.

The tenants he put in the house started paying rent late, at first a couple of days. Then a week. Then 2 weeks late. This became a trend. This being his only rental property, he started to have to pay the contractors out of his own pocket.

Then the tenants where not taking very good of the house either.

I should also point out that he didn't do any tenant screening, he let them because they were friends of a friend.

His point of view on how nice the place should look took a drastic change, more inline with my ideas.

In the end things have worked out and we basically agree on everything now.