Wise to do business with your tenants?

Question

Hi, I'm a newbie landlord.  I bought 2 tenant occupied units that need some work.  I have a few contractors that I would like to establish a working relationship with and had them do some bids for the roof and a fence.  Bids look pretty good.

The snafu...  Both of my tenants work for roofing/fencing companies.  They have both offered their services and have asked me to consider them.

My intuition says NOT to mix business with tenants.  Plus, for the long term, I really want to establish good rapport with the contractors I've worked with in the past.

The curve ball...  One of the tenants gave me an ultimatum saying if I don't use his father's roofing business to do the repairs I'll have to find a new tenant.  I responded essentially saying I'm not going to play favorites choosing you over the other tenant for this work...  I also said I have the freedom to chose whoever I want to do the repairs.  He seemed to back down for now...

Tips, advice, wisdom?  Any would be greatly appreciated.

Andy

Ann Bellamy · Answer

Two separate issues here:  Mixing business and business, and the ultimatum

First the ultimatum:  Under no circumstances would I allow a tenant to hold me hostage.  If someone gave me that ultimatum, I would answer that I intend to choose the right contractor for the job, and that I have a policy of not contracting with tenants or renting to my contractors.  And then ask if this constituted his formal notice to move.  In the case of the ultimatum given on behalf of the father's company, all the above would apply except you would not be contracting with a tenant.

Mixing the relationships:  This issue will have people coming down on both sides.  My experience in the past has been poor when I hired a tenant.  And the problem is that if the contracting arrangement has issues, it carries over into the landlord/tenant relationship, and you can end up losing an otherwise satisfactory tenant over a contracting dispute.  Or messing up a contracting relationship if the tenancy has issues.

I originally thought that why shouldn't I give a tenant the business if I needed some work done anyway, it would benefit both of us.  But I ended up feeling differently after bad experiences.

Hiring an onsite property maintenance person and giving them a unit as part of their compensation would be a different situation.   I don't have any buildings large enough to warrant that.

Rob Beland · Answer

Evict the jacka$$ making demands.

Larry K. · Answer

keep it separated in general.

That ultimatum is off putting. He thinks he has the upper hand which is just silly in this context but it sounds like that is how he looks at life.

Rich N. · Answer

Andrew, have everyone quote the job and hire neither one of them because they will be continuously bitch about the other's work.  I agree with you Strike two and your out of there.  cash is king, take it as long as they don't cross the line......verbal is not enough!

As a newbie, you will find out there is more crap coming down the line. His idle threat is no where near the stuff you will run into.....i.e. not paying rent or damages is when you act.

JD Martin · Answer

I think you're on the right track. Personally, I would have laughed at the ultimatum, especially if the guy is under 30 - that's just a lot of braggadocio talking. As long as he's paying the rent and taking care of the place, I would let it go in one ear and out the other.

As for the roofing, I *probably* would not use a company that the tenant worked for unless it was really soft picking for a decent contractor or they were the best and cheapest in town. This is double if you have a working relationship that you already value with one or more companies.

Andrew Briggs · Answer

Thank you all for your input.  I'm gonna keep it separate, no mixing contractors with tenants.  As for the ultimatum, it's noted I'll keep collecting rents for a few months to see if he 'strikes' again.  As a new landlord I need to build some cash.  However, this will likely be a 2 strike limit.  BTW, he's month to month.  Not sure if that makes it easier to hit the eject button?

Jim Adrian · Answer

Create a Request for Proposal (RFP) and bid it out to 3 or more companies.   Then you can use who ever you want.  Always get at least 3 bids.  You don't have to pick the cheapest one either. Some times you pay for what you get.

Brandon Ingegneri · Answer

Sounds like a letter of termination of tenancy to me.  I wouldn't want him renting from me, I wouldn't want to do business with him, and I certainly wold not want to let him think that would fly without any recourse.

Rob Beland · Answer

I wouldn't want a tenant making demands to me. He pays me to live in my house. I make the rules not him. If he has a lease its likely not grounds for eviction but as a TAW I would give him 30 days and get rid of him or just not renew his lease. (Im in MA and not familiar w IN landlord/tenant law but I think you get my point.)

John Van Uytven · Answer

Initially I thought you ment do business with the tenants themselves.

But the companies they work for. Maybe

Give them a fair shake.

Get the bids. CALL the references.

The ultimatum would turn me off, but maybe Dad isn't like the son.

Take your time and go slowly.

Wise to do business with your tenants?

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