Can anyone tell me what the general guidelines are for tenant buyers on a lease option if they want to make changes/improvements on the home. If they want to paint, add light fixtures, make other changes, etc. are there any specific guidelines you would recommend. It seems they should get my approval first, to make sure it makes sense (no hot pink walls, weird wallpaper, etc.) but aside from that I am not sure if there is anything else I need to think about. I just had this question posed to me by a possible tenant buyer to which I replied that I didn’t mind if they wanted to make improvements, but I would have to approve them first. Any comments would be most appreciated.
Susie,
On our Lease Options we allow tenants to UPGRADE the property subject to our approval - in fact, a lot of times we provide materials (ie. shingles, paint, carpet etc) and build that into the price of the home. Obviously this is a win-win situation because if they end up buying it then they have fixed it up to their liking and the home will appraise higher for a refinance or new loan. If they back out and don’t perform on their option, what you have left is a house that will again be worth more on the market and can be optioned for an even higher amount next time.
I do the same,
When they sign on an option with me all the repairs (major or minor become theirs. If they want to upgrade they need to do inform me what they want to do and get my permission. I don’t supply anything. However, if a major repair needs to be done and they don’t have the money to do it - I make sure the repair gets done and pay for it - but I add that cost to the option price. If they don’t exercise, I would have to make the repair anyway.
KEC