We need numerous repairs to our property. We have found a tenant through a friend who is willing to do DIY repairs to the home in exchange for reduced rent. He has a background in construction and seems ready and will to take on a number of projects.

We want to speak with him and develop a work plan that we can incorporate into the lease agreement. Our goal is to get the house on the market in 6-12 months, depending upon our work agreement. We have moved to another state 6 hours away, but we want the tenant to understand that we will be making visits to monitor progress.

Do you have any experience with this? Pros/Cons? Do you have some contract language that you could share with us?

Don't. Keep rent separate from work.

A. You may not like the quality of his work

B. He may not work as much as you want him to work

C. You are then on the "hook" to come up with the work each and every month that equates to the discount you are giving him.

D. He may not work as fast as you expect him to.

All this is doubly reinforced by the fact that you are 6 hours away.

In any event, you should require him to provide daily timesheets (via email) including start time, lunch begin, lunch end, quitting time, and a specific list of exactly what he accomplished. Anything remotely vague like "plumbing repairs" is not good enough.

Most landlords on this forum will tell you not to employ a tenant at all, but I've been able to make it work with daily on-site supervision. I micro-manage the workers.

Frankly, I don't think this will work for you - you're 6 hours away, you have no experience with this guy, etc.

This kind of idea very rarely works in practice.

Land lords are correct to discourage this type of plan.

The basic bar has to be set.

As a tenant this person should qualify,

As a repairman, this person should offer referrals and you should visit his past projects.

As an employer you should offer insurance.

The house itself should be in working order before being rented.

In recent months I had the opportunity to let two different helpers live in one of my shacks. We worked on the place together and the repairs were major. (I really like the kitchen design I put in). This shack was taken out of regular rotation because it was going to be for helper A, a good worker with few skills.

Helper A disappears for five weeks. Poof. Returns so broke that paying any rent at all is not possible. The rent was going to be $250.

Helper B steps in and has a good day job. Enjoys working in the evenings but actually needs to move. The shack is really nice, so the plan is that helper B will move in. Meanwhile helper B starts on another place and the work is absolutely horrid. The decisions the helper made will make you scratch your head.

These are both helpers whom I know, I have watched their work over months yet mind boggling events take place.

Although non-professional land lords do this kind of stuff all the time, and although it probably works out to some degree more often than not, I would not do it. As others have said, you create confusion in the relationship of landlord/tenant because now it becomes customer/contractor as well. You now have the potential for TWO relationships to go sour vs. one.

Let's pretend a minute that his work is good. But then he pays his reduced rent 5 days late. You call him. He's "a little short" this month.

You: "Okay, so now you owe me late fees."

Him: "Huh, but I do such good work on your places. You can't BUY this kind of professional work. I shouldn't have to pay late fees because I work so hard and do all kinds of extra nice stuff for you."

You: "No, that wasn't the deal. The deal was you do quality work and in exchange pay reduced rent ON TIME."

Him: "You saying my work isn't quality?!?! Well, that's a terrible way to treat me after ALL I'VE DONE FOR YOU. %@#$ you, SLUM LORD! And NO, I am not giving back that nail gun you loaned me. It's down at the pawn shop!"

Now you get to go find another contractor and you have a PO'd tenant to evict who has stolen and pawned every tool you ever loaned him.

Investing rule 101: minimize risk. A mixed contractor/tenant relationship compounds risk. Why not just hire a professional whom you can fire at will if he starts acting dopy? There really is no increased benefit for you to hire a tenant and there are dozens of downsides.

There is plenty of benefit for the tenant. What's the benefit to YOU?

Final thought: as mentioned earlier, I think the reason a lot of non-professional land lords get into these kinds of deals is they are lazy, fail to think thru the potential pitfalls and figure, "Oh, Joe's a nice guy and it'll all work out in the end."

I rent to several contractors. All pay full rent each month. They have separate contracts for each repair and always for labor only. I supply everything and tell them how to do it(I have a background in contracting/project management)

Look at it from the tenant/contractor's point of view.

Where's his incentive to work? You can't easily get him out of the house. Eviction takes months. And you'll only be coming around, what, once a month to check up on him if that? It's easy to put you off with excuses and how the job is harder than he thought but he'll have a lot of progress to show you next time.

And what's his incentive to finish? He'll be out of a free place to live if he completes the work.

Agree with TenantWhisperer point #C..that is where this typeof deal usually falls apart in terms of discounted rent, which is a bad idea.

Gruvin made a great example of how this can work.. I think the key is:

1-deal with legitimate contractors , who have other real woek going on. Old saying "if you want something done, ask a busy person"

2-make sure you are in charge of what projects will be done. Don't let the tail wag the dog.

We had a tenant who lost his job and declared bankruptcy (IRS problems), but continued to pay us. We needed some painting done around the property. We hired him to do the painting, but made clear that this was a separate agreement from his rent. How he paid the rent was his business. He did the painting and we paid him with a check. This was a long-term tenant we had inherited from the previous owner, and a decent guy. We were lucky it worked out, I guess.

NO. No. no. no. no.

Don't do it. No no no.

My partner didn't want to spend the money to replace an entire kitchen in a vacant apartment. So against my better judgement she rented the unit to a handyman at a reduced rent and allowed him to pick out and install new kitchen cabinets.

The first think he did was to demolish the kitchen and remove everything. Second he, his wife and kids moved into the unit. Then he installed a $29 laundry sink and left our used free standing oven in place. Then he set up card tables as counter space. Then he asked for money to buy the cabinets. My partner gave him a check payable to Home Depot for $3500. He used that money to buy supplies for other jobs and open a credit account in his name -- balance on account.

The he stop paying rent. Called in Housing that issued us a violation. We were not allowed to collect rent or evict until a new kitchen was in place, with all necessary permits.

Don, I think you are misunderstanding the original post

This tenant would move in right away, and also do repairs while living there

Don, even if we go with your interpretation of the scenario and the handyman does not move in until the work is done, I disagree with you that "the risk is all on the handyman, not the landlord."

The longer the place sits empty the more potential income the landlord is losing. As far as I see it, the risk is all on the landlord, because the handyman can much more easily find a place to rent while the landlord is still stuck with an unfinished property.

No. Period.

Hire him if you want, then pay him.

No occupancy during rehab.

If he wants to save his checks and use them for rent, fine.

But I will not rent to my repairmen. Too entangling. He will feel his is doing me a favor just by doing the work, then expect me to discount his rent. Never again.

A good manager keeps his relationships clear and defined.

1. Worker

2. Renter

the two do not overlap.

Now, to be polite: do this is you want. We'll all take bets on how long until til you post CONTRACTOR RIPPED ME OFF and we happily coach you thru the loss of your money, materials, and vacancy.

-Brad

NO. Do NOT do this. You cannot control anything that way, and from a distance.

Hire a real contractor, get the place done, and then sell it. Leave this messy handyman "rent for work" agreement out of the equation.

Also how do you deal with eviction if you hire he can say no i payed less