Tenant Request: How should I respond?

Question

So the story is, my tenant has been living at my property for a year now, and just signed a new lease. The house is in impeccable shape my wife says and he takes great care of everything. He always pays the rent on time and we expect him to live there for years actually, hes invested quite a bit into the house and I dont think he plans on purchasing a home or moving any time soon. He does have 2 kids a dog, and a girlfriend.

The carpets in the house were not in THAT good of shape when he moved in. My wife and I lived there previously and we had a dog and a baby which took somewhat of a toll. We cleaned them, but they are not great.

So the guy wants to get some estimates on installing carpet, and he wants us to split it with him 50/50. My initial instinct was just a flat no, but I do want to keep the guy happy, and he does take pretty good care of things. My wife wants to give it to him. I wonder what everyone else thinks?

One option that might be kind of middle ground, or maybe selfish by myself... I'll help find the installer, and pick out the carpet... and if we both agree then increase the rent over the next 2 years by around what my share cost or a little more(because the 2nd year we would have built in a 30$ rent increase)

So I could just make the offer to him if we can agree upon the installer and carpet...

Thanks!

Bob B. · Answer

@Joe Ebanks Carpet isn't that expensive.  Keep him happy and be glad he's willing to pay 1/2.

Ralph R. · Answer

@Joe Ebanks

Carpet is 2 things.  First off its the scourage of the earth and does not belong in a rental property.  Put in laminate flooring or something else.  Secondly its the responsibility of  the owner not the tenant most times.  Yeah if the dog tears it up its on him, but if its just worn out its on the Land Lord.  You can buy cheap carpet or expensive carpet but regardless you will replace it every 2 or 3 tenants or so.  You will also clean it between tenants and most times at your expense.  I never replace carpet with carpet.  I always put in something else, then I don't have to worry about it for a while.  Im going on 5 years and my 3rd tenant in one house with laminate flooring.  its stood up to kids and dogs both.  While I agree a long term tenant that pays on time and takes care of the place are invaluable you need to remember if this guy stays 3-4 years the value add of the new carpet will be marginable at best.  after all it wont be new any more and may even need replaced again.  if you want a good value add increase the deck size, paint the exterior or fix up the landscaping.  If he takes care of the yard that stuff will still be there when he moves.  Their isn't much he can do to keep the carpet (and its value add) from wearing out.

The other thing I saw in your post was you had the idea of increasing the length of the lease.  I rented a house to a tenant with a 2 year lease.  The carpet in that unit was shot when she moved out.  her deposit didn't pay for all the flooring costs either.  Current market rent when she rented it from us  was $900 a month.  When the lease ran out she left and we rented it for $1250 a month.  It was on the market for 3 days.  How much did that 2 year lease cost me do you suppose?  At least with a one year lease you can look at the rent after a year.  My leases become month to month after a year.  She wanted a 2 year lease and I agreed.  never again!  If the tenant is happy and I am happy then this works well.  If the tenant doesn't pay his rent there is no eviction charges.  you just give a 30 notice.  If he wants to move he just gives us a 30 day notice.

You will find its harder to keep rents current with long term tenants.  I have 2 under rented units now because rents have gone up by almost 1/2 in the last 1 1/2 years in my area. (IE $560 to $700 a month)  Its pretty hard to raise a tenant up that much that fast.   I keep working the rent up slowly,  one guy got upset.  we raised him $40 dollars from $585 to $625.  His first and only rent increase.   The other 1/2 of the duplex is rented for $700 a month.  He's been in there a year.  He gave his 30 days.  10 days later he called and said he wanted to stay.  Im betting he saw the rents when he started looking for a new place and decided to stay.     RR

Dylan B. · Answer

@Joe Ebanks

What I would do first off is get everything in writing.  Get a quote on the carpet/install and give the tenant a copy of that and have him give you 50% of that cost.  That way you are able to run the expenses through your business. Personally, I wouldn't increase the rent solely because of the cost of the carpet, you stated that the carpet was not in that good of shape so it would have needed to be accomplished anyways.

Loren Clive · Answer

Agreed, he's being generous in paying for 1/2 the carpet. You pick it.

The one time I did new carpet in a sale, the buyer wanted super expensive carpet and it killed the deal. Don't even go there--keep it easy, you pick the carpet then when he moves out put in luxury vinyl flooring which is inexpensive, easy to clean and totally waterproof!

Tracy Streich · Answer

You just said the carpets were not that good when he moved in.  If he moves out at the end of this lease you are replacing the carpet and paying 100%.  Why not get new carpet and pay for only half.  You don't have to buy the super nice stuff.  Avg rental carpet can be bought for $1- $1.50 per square foot.  Good tenants that pay on time are great.  Treat them well

Account Closed · Answer

I think you should explain the costs of the carpet from your point of view, and how it could affect the tenant, and then give them the choice between the options you'd need as the landlord with an investment in your property (which you should also show to your wife).

Under security deposit laws (at least in CA, but that's a fair law to work with), what's considered normal wear and tear  - that can't be deducted from security deposits - with regard to carpets, is based on the carpet's usable life.

So, for instance, if a carpet's usable life is 10 years, and the carpet is 5 years old, and the tenant trashes the carpet, the tenant can only be charged 50% of the cost to replace it.

So, since your tenant inherited a less than perfect, older carpet, the odds of them having to pay to replace the carpet is minimal, or the cost of paying for any damage to it will be minimal if anything, that will be charged against their security deposit.

So, if they want a brand new carpet, and even if you pay for half of it - your liability just increased by half the cost of the new carpet.  Therefore, if they want a new carpet, they need to not only pay for the half they want to pay for, but they will also have to pay a higher security deposit, as insurance for the additional potential loss out-of-pocket to you, if they happen to leave the new carpet trashed.

Now, it would be up to you to decide if you want to negotiate around this dilemma with them.  What would it be worth to you to pay 50% of new carpet, that they may leave trashed, and without a security deposit large enough to then replace this new carpet?

You'd have to do the math on that.

But, this is what you have to present and explain to your tenant (and your wife).  If your half of a new carpet, for instance, is $2,000, and the security deposit you have on hand is $1,000, then if they trash the new carpet and maybe do more damage and also leave owing you rent - you're screwed.

And you are smart enough to not operate under any promises of  - oh, they'd never do that...right?

Chris Carson · Answer

Carpet is cheap, good tenants are hard to come by. When he moves out are you going to leave the shoddy carpet in place? Why not keep him happy and save some future money at the same time?

Joe Ebanks · Answer

@Dylan B., @Bob B., @Tracy Streich,@Mike McCarthy,@Ralph R., @Loren Clive, @Chris Carson,Account Closed Hey guys, I appreciate all the fantastic responses!

Looks like I am being cheap! I will split the cost with him of new flooring that we can agree on. I do think he could be a 5 year tenant so I'll just do my best to find a cheap installer and good product.

Thanks a lot everyone!! You've helped make this an easy decision

Mike McCarthy · Answer

Agreed,  it's worth a bit of a cost to improve the house and keep him as a good tenant.  I've heard of landlords doing an improvement each year to help improve the value of the house and keep the tenants happy.  I think it's a good plan.

I would definitely handle it though.  You do the leg work with the carpet company, pick the style, pay the company, etc.  I would also give the tenants two options on carpet style and maybe 3 colors.  So they feel like they are picking it out - but you're sure they won't go with an orange shag carpet or something silly.

Make sure it's clear in writing that the 50% they are paying (over a few months I'd assume) is additional rent cost and the carpet is part of the house when they move out with no additional refund expected.  It should be obvious, but always better to have a paper trail.

Tenant Request: How should I respond?

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