Reduced rent in exchange for lawn care

[Michael Andrews]

I am under contract on my first property, a 12 unit that is home to many retires and I was looking at ways to cut costs right off the bat and the dollar amount for lawn care sticks out like a sore thumb.  Currently the property pays $3300 for lawn care in the short Wisconsin summer, while not totally unreasonable I was thinking for half that amount I could purchase a decent lawn tractor for the property and do the mowing once a week myself to save quite a bit.

Then the idea of either reducing rent in exchange for one of the tenants using the tractor once a week to mow the lawn occurred to me.  Has anyone successfully made a deal with a tenant like this and were there any liability issues, misuse of the equipment, or unfulfilled obligations that made it a sour deal?

[Marcus Auerbach]

These types of agreements work very well,.... until they don't.

Let's take a look at the upside potential:

- cost of equipment: probably higher as you wont get a decent amount of usage on your equipment, so most of the time the mower is sitting and rusting. No advantage.

- cost of labor: someone will have to sit on the mower, regardless if it is a tenant or a worker. Same, no advantage.

- your time to set up, manage, make sure the mower gets serviced and the oil changed, keep track and trouble shoot. Hidden expense on your side.

- contractor profit: that's where you safe. However the contractor has economies of scale, you don't.

- quality of work: a good lawn service will come with 2 or 3 guys, one will mow, onw will pick trash, trim the edges, cut weeds and blow the sidewalks clean after mowing. Professional look.

- liability: damage on a car, tenant doing the work get's hurt, hurt's someone else. If you apply the same for snow and ice: libaility if someone slips and falls.

- expenses: getting a bill for services is a plain write off. How do you handle the self service side, write the mower off over 5 years, expense the gas?, your time to follow up and manage?

- look at how the professionals do it: when I was in the construction equipment business and we had an issue we would always look how the car industry would deal with it - same issue, larger scale. Now I look to the large apartment complexes: how do they manage it? 

They put every process under the microscope and analyse it for income potential and operating risks, because on their scale it's worth to look for savings everywhere, but they also know if they accept risks they will encounter them rather sooner than later, because of their size. A lot of small investors are basically playing the odds and hope that the one guy who is mowing never has an accident. Now how does that look like once you have 100 guys on 100 mowers? Just food for thought.

My vote: be professional grade and look for a commercial grade solution.