Some tenants are terrible and will leave a list of damages for you to fix once they move out. However, the vast majority of renters will be good, and some will even be an asset to your property. They’ll take care of and maintain their rental, and they’ll also look to improve it. If these improvement projects succeed, they’ll add value to your property. However, if they end poorly, your well-meaning tenants may do more harm than good.
So, do you take the risk and let them make improvements? Here are a few questions to ask yourself before making a decision.
1. Did They Ask Permission?
If residents wish to make any changes to the property, many leases will stipulate they’ll ask permission first. In this case, it’s up to you to decide whether or not to let them move forward with the improvement. Carefully consider if the changes are necessary. Will these modifications improve your property value? Will the transformations make your tenants feel more at home? Or are these frivolous desires they can live without?
Meet with tenants and discuss property improvements, approving or disapproving them on a case-by-case basis. Doing this will allow you to provide renters with feedback on their ideas and offer alternative solutions. Moreover, insisting residents ask permission first will save you from the awkward situation of asking them to undo the improvement or pay for it themselves after it’s complete.
2. Are Your Tenants Handy?
There are some projects that you can trust your tenant to handle — like painting a bedroom or installing simple shelves. Share some guidelines and get a feel for your tenant’s comfort with this type of project first, but know that a couple holes in the wall or a splotchy paint job won’t be the end of the world.
Then, there’s the big stuff. You might require tenants to hire a professional to complete a complicated project. Otherwise, you risk your renter ruining your property or doing a mediocre job of fixing up the place. For instance, if they want to renovate the entire kitchen, you may withhold permission, as this can be both costly and risky.
This factor is especially true if your tenant insists on completing large property improvements themselves. If they do a poor job of renovating, you may be stuck with paying a professional to fix it. If you require them to hire an expert in the first place, you can skip this headache and rest easy knowing the end product will look amazing and possibly add value to your property.
3. Who Pays for Improvements?
If your tenant decides to modify the rental without asking permission and ruins the place, you have a right to charge them to fix the damages. This action may involve withholding their security deposit or charging them a fee when their lease expires. Either way, you shouldn’t have to pay to fix the improvement if it devalues your property. Moreover, if a tenant wants to make an unnecessary improvement, you aren’t obligated to pay for it.
However, if the improvements are necessary, some states give tenants the right to make repairs and stipulate the landlord is responsible for deducting the project’s cost from their rent. For tenants to qualify for this compensation, they need to have informed you of the problem and show that the repair was crucial for habitability. In most cases, a voluntary tenant improvement — like a fresh coat of paint — won’t qualify.
4. What Does the Lease State?
Regardless of who pays and what stipulations you have in place, it’s best to address the lease’s specifics. After all, verbal agreements aren’t legally binding. If you didn’t include details concerning tenant improvements in the contract, you can add an addendum addressing the issue. Be sure to add a clause outlining the ramifications if a tenant devalues your property as well.
This way, if a resident makes alterations without your approval, you can point to the lease and prove they violated the agreement. Now, you have the right to withhold their deposit or even evict them if they won’t cooperate. Of course, you hope never to find yourself in this situation. However, it’s better to outline these circumstances in the lease agreement to protect both yourself and your tenants.
5. Can You Reverse the Renovation?
If you choose to be flexible and allow your tenants to make improvements, minimize risks by ensuring you can easily reverse the renovation. For example, if a renter wishes to repaint their apartment, limit their paint choices to neutral shades or prohibit hues like bright reds and pinks. These are the hardest shades to cover if you plan to repaint the property after they move out.
If a tenant comes to you with a project you are unable to or will have difficulty reversing, you can always say no. Maintain this mindset as you consider improvements to save yourself money and any major issues down the road.
6. The Ins and Outs of Tenant Improvements
You might find that letting your tenant personalize their rental leads to a happy medium and a long-lasting rental relationship. However, if you’re thinking about allowing tenant improvements, some ground rules can help both of you set expectations. Not every DIY project goes as planned, and the added stress can lead to financial and even legal woes.
The best solution is to keep your tenants in mind as you plan property improvements. Your rental property is an investment — one you should work hard to improve and maintain. Renovating, repainting, re-flooring and updating components of your property are necessary to ownership. Claim responsibility for your property and commit to making improvements as you see fit. Your tenants will thank you.