Tenant Renovation?

[Allen Maris]

Hi Everyone,

Wanted to get some expert opinions.

I just purchased a SFR in Fresno (Clovis actually) with the fix and lease option route. Someone's interested in taking it as is and doing the renovations themselves.

That strategy makes me nervous since I won't really have control and they'll be doing what they want. And if they don't follow through with the option for whatever reason, they'll have more invest and more incentive for legal action for something.

Anyone do this route and can share why it could work? 

Thanks.

Allen

[Randy E.]

I haven't invested in the Lease w/Option to Purchase field, so take this as a gut feeling.

I would stipulate that if the tenant/purchaser plans on making any improvements for which your city requires permits, that the tenant/purchaser go through the permit+inspection process.  That way, if he makes substantial changes to electrical/plumbing/structural items and ends up moving out, you'll be assured those "improvements" were actually improvements and not liabilities.

If the current resident ends up backing out of the deal, you don't want new tenants moving into a house that is unsafe.  And if the house ends up burning down because of unpermitted electrical work, you don't want to lose out on insurance money because of that.

If the guy is just putting down flooring, painting, and doing some landscaping, I say go ahead and let him.