Tenant paid capital improvements

[svelte]

[quote=svelte]There is no way you’re gonna get a/c installed before the end of this hot season anyway.

And chances are she’ll be on a different tangent in 12 months anyway.

If it were me, I would get the quotes, tell her if she pays that amount up front you’ll have it installed, and wait. I bet she never comes through with the cash. Actually, I’d bet a pretty good chunk of change on it.[/quote]

Thinking about this more I would amend it slightly. I would make sure that in writing it states she is paying for air conditioned dwelling space, not for installing an air conditioning unit. I wouldn’t want there to be some legal way she could take the compressor, etc with her when she moved.

I’d also make sure there is nothing that specifies how long she is entitled to live there to recoup her money.

[paulflorez]

“I explained that I did not want any window air conditioners installed due the eyesore factor and possible need to attach supporting shelves to the house”

Tell her she can add a window air conditioner as long it is removed when she leaves with no damage, otherwise cost of removal and/or repair will be taken out of her deposit.

The eyesore factor is irrelevant if you are not living there, are not trying to sell the house and it is removed when tenant leaves. As long as tenant purchases a brand new window air conditioner, it should be small enough that a shelf support isn’t needed. I had a roommate buy a window air conditioner and helped him install it. It was fairly easy to do, the conditioner frame is build so that the window can close on top of it and the a/c is held in place by a part of it’s frame (flange) that rises up on the inside of the window and leans against the window frame. Tenant will need to secure the a/c to the window frame using screws (so that the window can’t be opened up which would result in the a/c falling out of the window), but those holes can be patched up afterwards with wood filler, liquid steel or other patching product.

Here is a good tutorial on installing a window air conditioner:
http://www.lowescreativeideas.com/Home101/Install_a_Window_Air_Conditioner.aspx

If you are concerned about damage during installation, you can always add the condition that it be installed by a professional.

If I was willing to entertain the idea of tenant paying for installing central a/c then I’d have zero problem letting them install window a/c. In fact, I’d prefer the window air conditioner because the worst case scenario is minor damage to the window frame. Installing central air and expecting the tenant to pay for it sounds much, much messier.

P.S. the summer this year was pretty brutal. At our house is was over 100 in the house for several days and we live less than 10 miles from the coast. The only refuge for the a/c-less is to go to places like Starbucks or the mall. Our roommate moved out and left the window a/c so we also huddled in that room occasionally. Those high temperatures without a/c becomes a big inconvenience, it does become difficult to sleep or be productive at home. We are definitely getting a whole-house fan and are considering either installing additional window a/c units or central air.

[bigwavedave]

Thanks for all of your opinions. I’ve been a long time lurker, so I figured I’d get both educational and entertaining feedback.
I wasn’t disappointed.

Yes, option 3 is the best way. Maybe I should have been more forcefull in the beginning and not even gotten any AC bids, but she
said she wanted to pay for it. I do think she was under the impression that total cost would be around $2K, so hopefully the bids
I got will take her back a bit. For now my plan is to kick the can down the road. Temps here topped out at 93F one day. Hot,
but not brutal. Kids should get outside and run through the sprinklers.

With regards to the window air conditioners, Just prior to renting among many other improvements I made, I installed brand new
double pane vinyl replacement windows throughout. All of them are sliders, 6 ft wide x 4 ft high in the 3 bedrooms, 8ft wide in
the master. I just don’t think a window air conditioner can be installed very well. I worry about the cantelevered weight on the
wide vinyl windows almost certainly causing some damage. They would also have to install a lot of blocking above the window ac
unit. If left in place over winter it would probably leak and cause water damage. Could eat up that deposit quickly. As far as
eyesore factor I do care, because I still have friends in the neighborhood, including both sides.

There’s no way I’m going to ‘gift’ any part of a capital improvement to a tenant. Not interested in a cost sharing project. If
she was a longer term good tenant then I’d be more inclined to entertain the idea of installing AC for an increased monthly rent
(or maybe let the tenant pay for it). But this is new tenant, and I have no idea if I’ll want to renew the lease in a year. Even
though she came with a good credit score, owns a local business, 3yr occupancy in previous rental house with no late payments I
have no longstanding experience with her as a tenant – it’s too early for me to go out on a limb.

I’ve got some unresolved problems with letting a tenant pay for it. First of all, the installation would be a contract between me
and the contractor. I would require an upfront payment from the tenant to procede which would have to be accompanied some other
kind of contract between me and the tenant. Assuming the best and there are no problems with the landlord-tenant side contract I
am not sure how the tenant payment to me would be treated for tax purposes. I think most probably it would have to be treated as
income – the capital improvement would then be a monthly depreciating expense. If I do the project late in the year I get screwed
on taxes. In this case I do not have any history with the tenant – the trust factor isn’t there yet to enter this kind of
contract without some legal/professional oversight which will cost me money – I’m double screwed.

I would be willing to pay for the improvement if I can recoup the cost over say 24 months through higher rent. I’d want a 2 year
lease as well before proceding. That works out to about $200/month more based on the $5K bid I have. Negligable impact on me as
far as taxes. Thing is if this tenant turns out to be a flake I may not want her around for 2 more years. The $200/mo extra rent
puts my property on the higher end, if the lease is broken early I’m not sure I can rent to someone else at the higher rent. Near
term I only see central AC as an incentive or bonus to prospective tenants – not really worth the extra rent I would have to get
to pay for the improvement. Very few homes in this tract have AC now.

Longer term I do see the benefit of central air. It seems the younger people these days are less able to cope with any form
discomfort. Kids just seem to want to stay inside with the windows shut at a constant 70°F. My primary residence a few miles away
from the rental property came with central air when we bought it, which I thought was rediculous. I think I’ve used it twice –
back in 1997. But I think that times are changing, more people will expect air conditioning.

[earlyretirement]

[quote=bigwavedave]

Longer term I do see the benefit of central air. It seems the younger people these days are less able to cope with any form
discomfort. Kids just seem to want to stay inside with the windows shut at a constant 70°F. My primary residence a few miles away
from the rental property came with central air when we bought it, which I thought was rediculous. I think I’ve used it twice –
back in 1997. But I think that times are changing, more people will expect air conditioning.[/quote]

I’m glad you see the long-term benefit of having central air. Even being so close to the coast.

I own several rental properties and I’d really LOVE a situation like this where a tenant was willing to pay for a big improvement like this.

The tenant sounds like an IDEAL candidate as well because she has a high credit score, stable work history/owns her own business, great track record at the last place she stayed, etc.

If she was willing to pay for it, I’d take the measures needed to protect yourself and get a real estate attorney to come up with a solid contract that protects you and I’d quickly get this done while it’s still hot out! LOL.

Being from the San Diego area you probably know that there are only a few weeks out of the year where you may need it but I can’t tell you how many potential renters from other cities that are moving here don’t know it and having a place with Central Air, especially if the other units in the area don’t is a huge selling point.

I find it a bit strange that some locals almost seem embarrassed or ashamed to use AC living close to the coast. It’s like some feel some guilt for using their AC or something. LOL. I don’t get it. My philosophy with a summer like this is use it if you have it!

I hope I get a renter like this! 🙂

Keep us posted which way you went with it.

[Essbee]

I’m one of the “badge of honor” people you guys are talking about:

I’ve lived in San Diego the majority of the time from 1993-present. I’ve only had AC for the past 6 months. My parents (near SDSU) still don’t have it. Yes, we’ve used it a few times, but I wouldn’t call it “necessary”.

Why can’t the woman simply buy a few fans? Within about 3 weeks, she won’t be talking about AC again until next July or so, anyway.

[paramount]

Why are so many here confusing changing consumer expectations with a changing climate?

We’re cooking ourselves – even coastal san diego is hot now. There is no escape.

[Reality]

[quote=paramount]Why are so many here confusing changing consumer expectations with a changing climate?

We’re cooking ourselves – even coastal san diego is hot now. There is no escape.[/quote]

LOL. Really? The climate’s changed so much in the last 2 years?

http://www.utsandiego.com/news/2010/sep/21/so-long-summer-hardly-knew-ye/

[CA renter]

[quote=earlyretirement][quote=bigwavedave]

Longer term I do see the benefit of central air. It seems the younger people these days are less able to cope with any form
discomfort. Kids just seem to want to stay inside with the windows shut at a constant 70°F. My primary residence a few miles away
from the rental property came with central air when we bought it, which I thought was rediculous. I think I’ve used it twice –
back in 1997. But I think that times are changing, more people will expect air conditioning.[/quote]

I’m glad you see the long-term benefit of having central air. Even being so close to the coast.

I own several rental properties and I’d really LOVE a situation like this where a tenant was willing to pay for a big improvement like this.

The tenant sounds like an IDEAL candidate as well because she has a high credit score, stable work history/owns her own business, great track record at the last place she stayed, etc.

If she was willing to pay for it, I’d take the measures needed to protect yourself and get a real estate attorney to come up with a solid contract that protects you and I’d quickly get this done while it’s still hot out! LOL.

Being from the San Diego area you probably know that there are only a few weeks out of the year where you may need it but I can’t tell you how many potential renters from other cities that are moving here don’t know it and having a place with Central Air, especially if the other units in the area don’t is a huge selling point.

I find it a bit strange that some locals almost seem embarrassed or ashamed to use AC living close to the coast. It’s like some feel some guilt for using their AC or something. LOL. I don’t get it. My philosophy with a summer like this is use it if you have it!

I hope I get a renter like this! 🙂

Keep us posted which way you went with it.[/quote]

I second this.

We’ve not had A/C for decades…until we bought this house. It was the first thing we put in after years spent driving around in the car on hot days, often checking out houses (that’s one way to learn all about the local housing market!).

We are far more pleasant people now with the A/C — the greatest invention ever made! You have no idea how wonderful it is to finally be able to sleep during the summer months (we are very heat intolerant, and use almost no heat in the winter). Our SDG&E bills have been huge, but the attic ventillation sucks (project for the winter), and in a 1-story house with no tress shading it, it can really feel like an oven.
…..

We made thousands of dollars worth of improvements on our rental, but we also knew we’d be staying there for awhile. It ended up being 8 years, which was longer than most people who bought homes in our area around the same time. Don’t knock tenants who are willing to make improvements. Our wise ex-landlords made a habit of it. They always had long-term tenants, and these renters (not just us) paid for most of the capital improvements to the house: new shower, new flooring, new paint, upgraded landscaping, etc. I don’t think the LLs ever had problems with any of the tenants because of it, and they even let the tenants handle the whole thing — contract, color/material choices, etc.

My parents were long-time landlords and had a number of retal properties in CA and TX. They also let their tenants make improvements. Never had any problems with it. As a matter of fact, some tenants improved the properties pretty significantly.

Don’t forget, not everyone is hung up on the “ownership” label. They just want a nice place to live in for as long as they’re going to live there. Many people rent the same place for decades, while some “owners” only live in their homes for a year or so. Whether they rent or pay a mortgage to a bank, they simply want to improve their homes. There’s nothing wrong with that, and it has nothing to do with being flaky.

Why not agree to a longer lease term if she’s willing to pay for the A/C? Sounds like a good deal to me, and I’d jump at the opportunity if I were you.

While not everyone needs A/C, everyone is different, and some people are more heat/cold intolerant than others. If it means that much to her, let her add the A/C.

Just my 2 cents. 🙂

[paramount]

[quote=JohnAlt91941][quote=paramount]Why are so many here confusing changing consumer expectations with a changing climate?

We’re cooking ourselves – even coastal san diego is hot now. There is no escape.[/quote]

LOL. Really? The climate’s changed so much in the last 2 years?

http://www.utsandiego.com/news/2010/sep/21/so-long-summer-hardly-knew-ye/%5B/quote%5D

Yes, Yes.

Consumer sentiment changes fast!!

2 years ago is an eternity for consumerists; I mean 2 years ago a Blackberry was all the rage now look where they are today.

[svelte]

[quote=CA renter]

We are far more pleasant people now with the A/C — the greatest invention ever made! You have no idea how wonderful it is to finally be able to sleep during the summer months (we are very heat intolerant, and use almost no heat in the winter). [/quote]

When we moved here from a much hotter climate, we insisted on renting places with AC. As we became familiar with the weather, we didn’t end up putting AC in the first two homes we bought. But after one particularly hot summer in the second house, my wife put her foot down and insisted we buy central AC.

It felt so luxurious! We were in heaven that summer. Now that we’ve adapted, we hardly even notice the difference. But I am certain my wife is back to the rule that AC is required whereever we live.

[Author]

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