Tenant Improvements Policy for SFH

[Ben Freiman]

Hello BP. I have a good problem with my new tenants in my SFH. They are a family of 5 and make good money, just don't have the best credit. Signed a 2 year lease with interests to stay longer, but didn't want to lock in long term yet since we did not know each other well. Their last house they rented for 7 years!! (Verified by prior landlord and also were excellent tenants).

When signing the lease they were interested in making improvements to the home, in order to make it their own. I am acceptable to this, because as they make improvements it will help my resale/re-rent value, and being in the SFH business I like my tenants to make it their home so they are happy and want to stay longer. NOTE: In the lease it states ALL improvements must be approved in writing by landlord.

Examples of improvements: Seal/Pave the driveway, Paint wood trim white (classy), new ceiling fans, etc.... 

My question to the BP community who have tenants, what is your policy on tenant improvements? Do you subtract from the rent the amount of the materials/supplies, do you also subtract labor costs too, do you subtract 50% of the cost??? I have my own views, but I would like to hear from others on what your policy is on "landlord approved" improvements. Thank you. 

[Dorothy Butala]

I personally don't allow tenants to do any improvements to the property, any updates must be done by my contractors or maintenance technicians.  You don't know if the tenants will do the improvements correctly or shoddy, and if they do a bad job, now you have to go back and do it all over again, which wastes a lot of time and money. A tenant can get hurt if they are dealing with electrical systems and you don't want that to come back to bite you.  

If tenants are a known quantity (meaning the have rented from me for a while, pay rent on time, and are overall good tenants) I will do updates for them, like put in a new ceiling fan.  The purchase and install of a new fan is well worth the money you will save if a tenant decides to leave, and you also are improving your property and making it more appealing and increasing the value when doing items like that.  

When a tenant leases a property from me, they are taking it as-is, but I will accommodate reasonable requests, and not charge them unless it is something very specific they are asking for that may not add value, but gives them a sense of feeling at "home."

If there are certain items they want, like a better ceiling fan than what I was going to provide, I will allow them to pay the difference to go with the upgraded fan, but ensure they know that it becomes a fixture to the property and it stays once they leave.  
I am currently putting in a fence for a tenant and not charging them because I know it adds value to the property, and is an amenity that future tenants will want (my rentals are pet friendly, so a fenced in yard for dogs is sought after). 

I am curious to see what you decide to do, keep us posted!