Entrepreneurial Tenant

[KateMcKenzie]

Hi everyone,



I bought a beautiful, brand new house in an older neighbourhood and then put in a two-bedroom basement suite. I rented the whole house to a young man, his wife and two children. He had a very good credit rating and good references. I let him rent out the basement suite, as I thought that I would then not have to worry about noise complaints etc. The upstairs has four bedrooms and I told him he could rent out one of the rooms, as he is going to university and wanted some help with his rent. I recently found out that his wife and children have moved back to B.C. for the school year and he has rented out every room in the house. He has also rented out the garage. I estimate that he is clearing $1,000 per month on the house. I talked with one of the neighbours and it seems that people are coming and going at all hours of the day and night.



I have been thinking about the following three options:

• Do nothing but keep a close eye on the place (and maybe ask for a larger damage deposit)
• Evict him for violating his leaseTell him he can only rent out one room in the upstairs as per the lease

I would appreciate any advice on how to deal with this situation.



Thanks!



Kate

 

[wealthyboomer]

Ask for a cut of his profits.

 

[Thomas Beyer]

Think win/win !

Work his strength ! he can be a good partner, within a framework. The framework could be: no more than X people per house, no more than Y cars and every $ over Z sub-let will be split 50/50 !

 

[terri]

QUOTE I bought a beautiful, brand new house in an older neighbourhood and then put in a two-bedroom basement suite.


Seeing as how it`s a brand new house and having it treated like a rooming house will probably mean lots of wear and tear, I would give him notice for violating the lease agreement and get someone else in there that will take care of the property, but that`s me, I can see that other`s see it as cash potential. My first question to you is what are your long term goals for this house? Are you looking simply for maximum monthly cash flow or are you planning on selling the house in a few years in which case you need the house to be well maintained.

Terri

 

[GarthChapman]

What you do should depend on the zoning for the property.

If it is not zoned for the Basement Suite then check how the municipality handles complaints and make your decision accordingly.

If it won`t be an issue then set some reasonable rules and enjoy perhaps a bit of the profits you might negotiate with your entrprenurial tenant.

If it will be an issue (usually these are complaint driven) then you may want to shut it down before you lose your Basement Suite.

Whatever you decide make sure to work with your neighbours to get them on board.


And let us know how it goes!

 

[KateMcKenzie]

Thanks everyone for the feedback - I really appreciate it! The basement suite is legal, so I am not worried about that part. However, I am worried about the condition of my home. My long-term plan is to hold for five years and then sell if the conditions are right. I think I will do a walk-through of the house and get a sense of what is going on. If it doesn`t feel right, I will have to hold my tenant to his lease. If it feels okay .... maybe I will ask for a cut!

Thanks again,

Kate

 

[invst4profit]

As a rooming house in 5 years the interior will require a complete cosmetic redo in order to sell. Repairs, paint, flooring, etc.
In addition the bath and kitchen will probably take quite a bit of abuse and require additional work.
The repair and prep work to sell as a SF home at par with the neighbourhood could cost more than the additional rental income you could make off this situation.
Maybe not a good plan if resale in 5 years is the intention.