Tenant willing to pay half if I build a garage

[Nathan Letourneau]

I had a tenant ask me if I would build a garage at my rental house. I informed them that although it would be nice, it would simply be too big of an investment and would take too long to recoup my costs.  Later they ask if I'd be willing to do it if they paid for half of it.  I said I would be open to it.

I need to talk it over with a lawyer of course, but before I do I thought I'd bounce the idea off of everyone here first and get my ducks in a row.

Here is how I am thinking of doing it.... I would pick the contractor and make the garage the way I want to match the house.  The tenant would pay me a lump sum for half of the cost up front  ($9000) before any work begins. To avoid any confusion with a judge/lawyer after the fact about if the tenant owns half the garage since they paid half, I would classify the lump  sum  payment as a prepayment of rent.  

Since the tenant is paying half, I would essentially keep their rent the same for the next 2 years. On the actual lease, I would increase the rent about $750/month for the first year to account for the $9k payment and the second year it would go back to the same rate as right now. 

Does this all make sense? I'm trying to avoid any inplied ownership (hense using it as a prepayment for rent and not a payment towards the garage). Then I have to increase the rent during the first year to offset the lump sum payment.  I am doing it all in the first year, so that if they break this lease and move out in year 2 I have already covered the lump payment I received.

How would you approach this?