Giving the Tenant Money?

Question

Hello all,

Just bought a new property and I decided to move in a tenant from another property that I own because she is not comfortable with the neighbors.  The new place could probably rent for $1,000 a month but my reliable tenant can only pay $900.  I have to change the carpets and do some other nonstructural updates like painting and sanding.

I am thinking about just offering my tenant $1,000 cash to do whatever updates they want and to leave me alone.   Anybody ever do this?  If I do it, how do I classify this expense when tax time comes?

Sylvia B. · Answer

You're joking, right? You're going to hand over $1000 to a tenant and tell them to do whatever they want to your house? And you want them to leave you alone?

This is not a good plan.

Steve Babiak · Answer

why don't you negotiate the usual $2k items down to a list of $1k items with the tenant, and then do that $1k of work. Explain to the tenant that you have a certain budget in mind and are trying to stay within that so you don't have to raise the rent.

Steve Babiak · Answer

Now that you have mentioned it's a Section 8 tenant, make sure that your $1k is spent on inspection related items first ...

Peter Grosso · Answer

@Raymond B.   Thanks for the lesson.

@Steve Babiak  Normally I would Steve, however I had some reservations in this situation.  I own several what could be known as "D" properties in the area.  My property manager does an OK job of making sure they are up to date and comply with code.  I don't however trust him in this house doing any work that is to the quality of the house.   I live seven hours away and plan on making those connections soon.  But with the birth of my newborn I was trying to postpone that trip.    I really like this tenant and want to provide her with a great home to live in, but I since she can only pay $900 instead of $1000 a month and I don't have the contacts or the time yet to make the place nicer I thought I would give her the money and the freedom to make herself comfortable however she chooses.  Even if it is a big screen T.V.  As long as she was happy, and I was getting my rent (section 8) I would be would have bought a year at least to make the proper contacts.

Richard C. · Answer

I was on the other side of this sort of transaction a couple of time (20-25 years ago).  Somehow, I managed to avoid buying a wide-screen TV.  Honestly, the contempt some people on here show toward tenants fills me with ... contempt.

You say this is a reliable tenant.  One you already know, and apparently trust to do what is agreed.  Sounds like a win/win to me.

Raymond B. · Answer

@Peter Grosso,

To make the @ work, do the following: Hold down the shift key and type @? Look below this Window, and you will see a list of names of people that have posted in this thread. Click on the name of the person that you want notified via an email, that you responded to them. If you are a Colleague with anyone that has NOT posted in the thread, and you want them to see your post, hold down the shift key, type the @ and the first 4 letters of their First or Last Name. Then look below this Window and click on that person's name. Raymond

Peter Grosso · Answer

@Sylvia B- I don't want them to do whatever they want, I know they will stay there at least a year.   I don't care if they replace the carpets or not, everything is in good working order.  It could use a refresh.  My thought process is that the tenants are already committed to living in that place.  I could put $2,000 into the small updates that I would normally do, or give them $1,000 dollars and when they move out in two years I can make those upgrades once instead of twice.

Pete T. · Answer

Just do the repairs you need to and if they go, they go/

Curt Davis · Answer

Dont be surprised when you give them $1,000 and they go buy a big screen and dont make any repairs only to come back at you wanting them done and if you dont make the repairs they will move out.

Just keep a record of the $1,000 gift and put it towards repairs for that property.

Giving the Tenant Money?

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