Tenants are asking for a rent rebate for renovation

[Teddy Kennedy]

Newbie investor here, apologize in advance for the long post.

I have a house rented for $2k/month for 3 years. It is a 3/2. We are currently in the third year of rent. I have not increased their rent (although I should have). The house is rented to college students, with the parents paying and dealing with everything.

The house had a burst pipe and water damage in the shared bathroom in August of 2023. I relocated the tenants to an Airbnb for $1k while it dried out and the plumbing was replaced. Insurance wrote a check for much lower than what contractors were bidding for restoration/remodeling. 

The trouble was finding a contractor within budget. We got varying bids of quality and prices. It was hard to gauge. Eventually we just decided on remodeling the bathroom where the original pipe damage was and leaving everything else be. 

There is no loss of use. There was a hole in the wall where the drywall was broken to access the pipes. I agree it looks ugly. 

Since the kids are in school, the only real window to remodel was in summer. Unfortunately it was hard to find a contractor during the summer who would take on this "small" job (~$3k). The scope of the work also changed; below the toilet the subfloor has started sinking and needed to be replaced. 

Anyways, we are finally able to start work in October. My intent was to use the local reputable contractor (think of the guys sponsoring sports). Again, the job is too small but the general contractor gives me his subcontractor to use. The subcontractor finished and did a fine job...but he took too long. It took him 3 weeks when originally he gave me an estimate of a week. I am certain the subcontractor had other jobs and this was put on the back burner. I had to put the two shared-bathroom kids in a hotel for a total of 7 days at the cost of $450. The kids could shower but not use the toilet. One of the kids just lived with his gf for a bit and other found a toilet somehow. The master bathroom is still working, but I presume for some reason the kid in the master bath wouldn't share.

I was doing all I could to get the contractor to finish the job on a weekly basis. I was at his mercy, and I was concerned the contractor would run away. It's not like I had him on other jobs. 

The remodel is now finished. The crux of the issue is that the tenants (the mothers) are asking for a rent discount for October. I'm inclined to say no, especially because my margins have gone down significantly with increased property tax and insurance, and I haven't raised rent. Additionally, there was still a fully functioning bathroom during that time. They are asking for $1,500, which seems egregious to me. 

Lastly, I have been lenient with the tenants regarding late rent. I'm not really concerned they won't pay (they all seem to be wealthy). I have not charged them late fees, but in totality, it could excess $1k. I am also considering selling the property next spring so this would be the last lease and I don't to play nice. 

Should I give them a rebate? How should I calculate loss of use for 3 weeks? Can I subtract the cost of the hotel? 

Any advice is appreciated, thanks!

[Russell Brazil]

How long was the issue ongoing for? If we are talking a week or less, then no. If we are talking about a month, then Id say yes

[Teddy Kennedy]

The original issue of the broken pipe was fixed in a day. 

The issue of the exposed plumbing on the wall took about 3 weeks to finish from start. 

[Russell Brazil]

Quote from @Teddy Kennedy:

The original issue of the broken pipe was fixed in a day. 

The issue of the exposed plumbing on the wall took about 3 weeks to finish from start. 

 Id say 3 weeks is an unacceptable timeline for a landlord to leave a giant hole in the wall.

[Teddy Kennedy]

That’s fair but the contractor had started working. The contractor took 3 weeks. Does that give me any leniency? My hands are a bit tied here. 

[Theresa Harris]

Sorry if I replied but internet when down when I hit post....I don't see my reply.  If the contractor was in there for a day and then the hole in the wall (in your photo) was open for 3 weeks, but the bathroom was usable, I would not give them a discount.  The room functioned and it isn't like they couldn't put a trash can in front of it to cover it up.  Also if the parents aren't on the lease, I wouldn't bother replying to them.

[JD Martin]

Random thoughts:

1. Someone should have just screwed up a piece of drywall and primed it white over that hole until the summer came. That literally would have taken about 15 minutes and no ugly hole in the wall.

2. If you've kept putting them on one year leases, you should have left it M2M so you could just raise the rent when you needed to. If they are on M2M, easy answer is give them the discount and raise the rent to cover the discount. 

3. I hope you mean August 2024 was when the damage was. Because if you mean this happened in August 2023 and you just got around to it in October 2024 that's pretty irresponsible. 

4. Your margins are irrelevant to any issue of fairness. If you are making less money because you didn't raise rent or charge late fees, that's not the fault of the tenant. You can't reasonably use that as justification to refuse a fair request (I'm not passing judgement on whether the request is fair or not). 

5. If you put them in suitable housing during that time, they owe you the rent. If you put them in a one room studio instead of a 3br house, they are entitled to some recompense for loss of use. 

[Scott Mac]

Based on what you said, if it were mine I not issue any refund.

Your contractors statements and behavior seem to fall within the range of normal experiences in my opinion.

If you were a larger user of a particular plumbing service, such as 120 apartment units with older plumbing and frequent issues, or a McDonald's you might expect a little better service.

Good Luck!

[Greg M.]

You wrote a lot and it's a little confusing. Pipe burst and you fixed THE PIPE while paying for alt living for those affected. You did not fix the resulting damage/holes. 

YOU decided that it was in YOUR best interest to do a remodeling at this time rather than just repair the access areas. This resulted in the loss of a bathroom for 3 weeks.

What does your lease say? It greatly matters. Is the entire place rented to 3 people and there are 2 bathrooms and they decided who got which bathroom? Or did you individually rent the place to one person with one bathroom and then to two people using another shared bathroom? If you did the latter, then there was no usable bathroom during this time for those residents and technically the unit was not habitable. You own them the rent during this time minus any time you provided alt lodging. If the former, you should compensate them something for the inconvenience, but $1500 seems high. Max would be their share of the rent for 3 week minus any alt housing costs during those 3 weeks.