Should I paint/carpet with tenant still occupying property

Question

I recently purchased an occupied SFR with long term tenant on a month to month (lease expired and reverted to M2M). Upon meeting with the tenant I advised them of the repairs I would be making (new A/C, Clearing bushes, sealing back area, painting handrails, adding smoke detectors and fixing toilet and bathtub caulking) and the amount I would increase their rent the following month and thereafter ($50/mo). The rent is still about $100 below market but the place is rough and would require a lot of rehab.

They agreed to the amount quickly but then asked me to repaint walls and re carpet the flooring if they sign a new year-long lease. They have been there 11 years.

Normally I would do this in a heartbeat the interest of a long term tenant but these tenants are living this place hard. They are not clean people. It's more trashy than I would typically buy but I won't go into the reasons for my decisions on this thread.

I am in the middle of two other projects so I don't want to move them out and let it be vacant while I am waiting to get to it.

A new lease has not been provided or signedyet and I mentioned that those items would necessitate an even higher rent on the new lease if we could come to an agreement.

I told them I would give them options shortly. Looking for a full spectrum of advice here:

Should I?

How Much should I raise to offset cost?

Should I ask for a multi-year lease ( I don't think there would be much ability to collect if they changed their mind) so this is probably not a good solution)?

What should I be aware of legally that could be lurking in the shadows?

If I do these items should I take before and after pics for a possibility of using their security deposit. There are large stains on the wall and carpet.

One other bit of info: I did get the security deposit transferred to me on sale.

Thanks so much in advance for your advice.

Dwight

Robert Nason · Answer

If they are rough on the apartment and the carpet in place is even in reasonable condition I would leave it there. Why invest your money in something that's just going to be ruined.

Dwight Rigel · Answer

Great insight everyone. I appreciate the experience and willingness to share. This gives me confidence to approach this in the way that is needed.

Thomas S. · Answer

I would do the absolute bare minimum of necessary maintenance for long term tenants. Especially If these ones are pigs you do not want to invest in cosmetic work.Raise their rent to where ever you feel is the highest you can go without them deciding to leave. There is absolutely no reason to provide a term lease, keep them on M2M they are not going anywhere. If these ones are pigs you do not want to invest in cosmetic work.My future plans would be to get rid of them, do the reno work when your time permits, and get new tenants at the new higher market rent.I personally place zero value on long term tenants that are below market and always work toward increasing value to obtain higher full market rents with newly screened tenants. Inherited tenants tend to be set in their ways and difficult to work with. At the point in time I was ready to renovate I would give notice to increase your tenants rent to full market. If they stayed I would not do the reno work, if they leave I would go ahead with my plans. The only true value to long term tenants with under market rents is they are inclined to pay more for less due to a reluctance to move. If they were less than desirable tenants when I was ready to reno I would simply give them notice of non renewal.This is the major advantage of having M2M leases, you always remain in full control of your investment.

Aaron T. · Answer

I would look for a more sustainable flooring for the long term. Clean carpets for now, but wait until the unit is vacant before replacing flooring, otherwise you will have to do it twice.

Levi T. · Answer

No, inherited tenats in my experience have a 50% eviction rate within the first 12 months. If they don't like it they can move out, then you rehab and bring rents to full market price.

Dwight Rigel · Answer

Thanks Rob. I like the idea of steam cleaning the carpets.

Rob C. · Answer

If you do them, yes you should take before/after pictures for their security deposit, especially since you said they're not clean people. It's really up to you if you want to do the work - you could always compromise with them. Steam clean the carpets instead of replacing for example. They don't sound like the kind of people I'd want a multi-year lease from, and if they are nightmare tenants, you don't want to be locked in with them too long right off the bat. Don't be afraid to say "no," and you can explain you're spending a ton of money on the necessary repairs and can't get to cosmetics right away. Either way, don't feel pressured by your tenants to do work you're not prepared to do. Not sure what items might be lurking legally - as far as I know, you're not legally required to repaint and replace flooring. Good luck!