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Allen

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My best friend wants to move into my old house. It needs work, and I don’t need the rent from it so I’ve let it sit empty for years.  But the lot abuts Springwood and increases my road frontage, so the lot is way more valuable to me as land than as a rental. 
 

I told him there is no way I can sell it. He still wants to move in. He’s a GC and says the repairs that it needs would be trivial for him since that’s what he does for a living. 
 

Mixing money and friends is never a good idea. I’m torn. If I let him move in I end up with a rental that I was planning on pushing over. However if things go sour I loose my best friend. 
 

Suggestions? What would y’all do?

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I would speak plainly to your friend. This is my position. I am torn renting to you as you are a dear friend and do not want a business arrangement to come between us. However, because we are friends I will rent to you but do not expect our friendship to be part of the agreement. This is business. 

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47 minutes ago, Allen said:

He still wants to move in. He’s a GC and says the repairs that it needs would be trivial for him since that’s what he does for a living. 
Mixing money and friends is never a good idea. I’m torn.

If it were me...  I wouldn't want to rent to anyone until the eviction moratoriums are all part of history.   Too much risk for the landlord. 

Worse case... he rents, stops paying (or not), you find someone to buy the land and you can't sell because you have a tenant you can't evict. 

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20 minutes ago, shootingstar said:

So as you're willing to pay for materials, etc.  

That’s one of the caveats he will have to agree to. I’m not putting money into it. It has set empty since ‘09. It’s in the middle of the pecan and walnut orchard. My plan was to demolish it and plant some more pecans. I was talking to him about pushing it over, and that’s when he said rather than do that let him live there. 

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9 minutes ago, Bikeguy said:

Worse case... he rents, stops paying (or not), you find someone to buy the land and you can't sell because you have a tenant you can't evict. 

I’m never leaving where I live now. I lucked into a slice of heaven. I’m leaving it to one of my sister’s kids. 

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1 minute ago, Allen said:

He is. Very good guy. Like near jsharr quality. 

I get that it’s a benefit for him to live there, for him. And I understand that he’ll likely repair the home. But if you don’t ever plan on selling it, is that at benefit for you?

I think you need to benefit from this in some way to make the stress worth it? Obviously you’d prefer the place go back to pasture (or orchard), so can you find a rent that both friendly to him and yet beneficial to you?

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I know it can be awkward to deal with financial items with a friend, but if you do this I think you need to go to a real estate lawyer and get a well drafted lease.  It all seems good up front, but things can turn ugly in the future and having your expectations clearly laid out is good for both of you.  Especially if he is going to do repairs.  You don't want him (or his kids some day) arguing that they're entitled to be paid for the work he did or insisting that you had some sort of agreement.   You should also have some definite time period.  You can always renew it if you want, but don't have an open ended agreement.  Plus, can he invite other people to live there with him?  Are pets ok?  If so, how many?

Personally, I'd want to avoid the entire situation, as I see too many things that can go wrong.  But if you want to do it, make sure you have it written down in an agreement  - if nothing else it will identify if you and your friend don't have the same understanding.

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23 minutes ago, Kirby said:

Personally, I'd want to avoid the entire situation, as I see too many things that can go wrong. 

This^^^   @Allen  This just 'feels' like a bad idea to me.  All I have is what you posted.  I guess I'm just not a very trusting person when it comes to situations that could directly affect where I live.

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As others have said, too many things that could go wrong and very little benefit to you.   You already do not want the house, you do not want or need to rent it and so you would be fixing up something that you want to tear down.

Is moving the house an option?  If so, move it to the edge of the property and let him live there and then do work on the part of the property you like.  That way if things so south, you deed a 1/4 acre of land to the guy and give him the house.  

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1 hour ago, jsharr said:

As others have said, too many things that could go wrong and very little benefit to you.   You already do not want the house, you do not want or need to rent it and so you would be fixing up something that you want to tear down.

Is moving the house an option?  If so, move it to the edge of the property and let him live there and then do work on the part of the property you like.  That way if things so south, you deed a 1/4 acre of land to the guy and give him the house.  

Moving the house is not feasible. However it already is on the edge of the estate. But, I want every inch of road frontage it gives me. 
 

 

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I would suggest you separate the two issues.

If your house needs work, then hire your friend to do the work and pay him going rates.  The money you pay him he can use for finding a place to live and will help him build a stable income.  It would in all likelihood also help him with any alimony payments to which he's obligated under his divorce.  It may even help him pay off any bills he currently owes and improve his credit score (which, by the way, is something you should check if you do agree to the arrangement you propose).

Your friend has a lot of issues swirling about in his life.  I would suggest a close examination of where you and your property will stand in priority against all those other issues.  By hiring him but not housing him you can help him directly yet remain detached from the second issue of being a landlord to him and having to provide him with a place to live.

Kirby's advice of a well drafted lease is excellent.  But consider how difficult it would be to define the terms of him living there rent free in compensation for what repairs have to be done by when and at what level of quality.  People run into problems with contractors all the time for not complying with contract terms for schedule, payments, and workmanship.  Consider now that you'd be complicating what is essentially a construction contract by layering over top of that with a rental/lease arrangement.  And if your friend's swirling personal issues prevent him from fulfilling his part of the agreement, then even a well-crafted lease won't protect you from having to begin eviction proceedings with all the inherent complications not to mention losing the friendship.

I suspect your friend's difficulty in finding housing is he needs a place to stay where he can store his tools, materials, and use as a home base for his business.   If he had such a place then he only needs to find an apartment for living needs which is much easier.  If you really want to go the trade-repairs-for-helping-him route, then I'd suggest you offer to let him make repairs on your house in trade for you paying for a storage unit where he can keep materials and tools.  That way you can help him, you can get the repairs done on your home, but if he doesn't perform you can simply stop paying for the storage unit without any further legal entanglements.  The only rental contract involved is between you and the storage unit company, and at worst you simply let it lapse at the end of its term without any further financial obligation.

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I knew a guy that lived in a house rent free. The lady that owned the house was in a nursing home and wanted the house occupied but didn’t want to sell it. The house needed quite a lot of work but she didn’t want or couldn’t pay for the repairs. He didn’t want to pay for the repairs because it wasn’t his house. Eventually it got bad enough that he moved out and someone came in and took the house down. The property has been vacant for years now.

I rented a big farmhouse one time that needed upgrading. I wanted to buy the house but the owners wouldn’t sell because the house was in the middle of 100 acre farm. That’s understandable. I worked out a deal where I could spend up to half the rent money on repairs and upgrades. It worked for me. I remodeled the bathroom, took out a wall and made the bathroom twice as big as it was. It only had a tub and a toilet. I added lighting, a sink and vanity. Upgraded the wiring and added hookups for a laundry room. All the rooms needed painted, we had fun with that. We bought our first house and left after five years. I loved living out there but I didn’t want to rent forever.

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I didn't get the impression that Allen cares too much about the actual repairs, so I don't think we need to be too specific about making sure the repairs are done in a certain manner.  But I think the lease is important to avoid any future arguments  (by your friend or one of his heirs/creditors) that there was some other agreement giving the friend any sort of ownership interest, and that there are defined term periods so that if at some point in the future the arrangement doesn't work for Allen, he has a set period after which he can change the arrangement.  I view the lease as preventing the "downside" rather than ensuring the "upside" .

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2 hours ago, Kirby said:

I didn't get the impression that Allen cares too much about the actual repairs, so I don't think we need to be too specific about making sure the repairs are done in a certain manner.  But I think the lease is important to avoid any future arguments  (by your friend or one of his heirs/creditors) that there was some other agreement giving the friend any sort of ownership interest, and that there are defined term periods so that if at some point in the future the arrangement doesn't work for Allen, he has a set period after which he can change the arrangement.  I view the lease as preventing the "downside" rather than ensuring the "upside" .

This morning I scheduled an appointment with the lawyer.  No, I’m not concerned about the repairs. 1.) I had no intention to rent the house, and 2.) Clayton (my friend) is a very good carpenter, and plans to live there with his son and soon to be wife (his divorce was a while ago); the work won’t be slapdash. 
 

Clayton is that friend one is lucky to have who may as well be family. Unlike my actual siblings who live close by, he was here the night my mother passed, and here when my dad died in my arms. I would happily sell the house to him if it was not so valuable to the estate because of the frontage—thinking of my heirs. And I would happily let him build elsewhere on Springwood except that would impact my lighting bugs’ habitat—more important than my heirs, the lighting bugs can’t financially fend for themselves. 
 

Except for what lives on the back of his truck, he won’t be keeping tools or equipment here, he has a shop in town where he conducts business. He wants to live here until his son turns 18. Then his plan is to buy his own version of Springwood in the N. Georgia mountains. He does wish to live in my old house for the same reason I bought it in the first place, it abuts Springwood which, not to brag, is a gold strike for an outdoors person. 
 

Benefit to Clayton is he gets access to my land without being saddled with a mortgage. Benefits to me are I have my most trusted friend living within walking distance—getting older and living alone that is something to consider. And when he does leave, instead of a blank spot with two more pecan trees, I end up with a rental house. Downside, I don’t want to risk losing a “brother.”  Financially I don’t think I’m at much risk. The lawyer says he can hammer out an iron clad lease.  And while I don’t consider myself rich, I am well off enough that I don’t need the income from the rent. 

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Properly documented, this sounds like it can be a good arrangement for both of you.  I'm glad you saw the lawyer to protect against potential downsides, and now I hope this arrangement works out as well.  .  I assume  the lawyer also covered  any financial implications to make sure things are characterized properly to get the tax reament you want (presumably not treating repairs as income, but trading off deductions for rental property expenses - although I'm no tax expert and don't even do my own  simple taxes!),  It's my nature to try to think of problems and how to address them.  But from your post, it's clear this person is a very special friend to you and I'm glad that you can find an outcome that helps him, and keeps you close with someone you value so much.

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1 hour ago, Kirby said:

Properly documented, this sounds like it can be a good arrangement for both of you.  I'm glad you saw the lawyer to protect against potential downsides, and now I hope this arrangement works out as well.  .  I assume  the lawyer also covered  any financial implications to make sure things are characterized properly to get the tax reament you want (presumably not treating repairs as income, but trading off deductions for rental property expenses - although I'm no tax expert and don't even do my own  simple taxes!),  It's my nature to try to think of problems and how to address them.  But from your post, it's clear this person is a very special friend to you and I'm glad that you can find an outcome that helps him, and keeps you close with someone you value so much.

You are very kind, Kirby. Thank you. 
I spoke to the lawyer on the phone this morning, haven’t met with him face to face yet. I’m leaving the specifics of the lease to him, beyond my pay grade. 
Clayton is coming out this afternoon to clean the landscaping, and get a proper handle on what needs to be done to the house. When he gets here we are having a heat to heart about money, and that I don’t want him doing anything that may be financially detrimental to himself—like leaving right after he completes repairs means he loses out. 
We’ll see how it goes. 

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2 hours ago, Allen said:

This morning I scheduled an appointment with the lawyer.  No, I’m not concerned about the repairs. 1.) I had no intention to rent the house, and 2.) Clayton (my friend) is a very good carpenter, and plans to live there with his son and soon to be wife (his divorce was a while ago); the work won’t be slapdash. 
 

Clayton is that friend one is lucky to have who may as well be family. Unlike my actual siblings who live close by, he was here the night my mother passed, and here when my dad died in my arms. I would happily sell the house to him if it was not so valuable to the estate because of the frontage—thinking of my heirs. And I would happily let him build elsewhere on Springwood except that would impact my lighting bugs’ habitat—more important than my heirs, the lighting bugs can’t financially fend for themselves. 
 

Except for what lives on the back of his truck, he won’t be keeping tools or equipment here, he has a shop in town where he conducts business. He wants to live here until his son turns 18. Then his plan is to buy his own version of Springwood in the N. Georgia mountains. He does wish to live in my old house for the same reason I bought it in the first place, it abuts Springwood which, not to brag, is a gold strike for an outdoors person. 
 

Benefit to Clayton is he gets access to my land without being saddled with a mortgage. Benefits to me are I have my most trusted friend living within walking distance—getting older and living alone that is something to consider. And when he does leave, instead of a blank spot with two more pecan trees, I end up with a rental house. Downside, I don’t want to risk losing a “brother.”  Financially I don’t think I’m at much risk. The lawyer says he can hammer out an iron clad lease.  And while I don’t consider myself rich, I am well off enough that I don’t need the income from the rent. 

I knew you would find a way to do the right thing for everyone.  With the backstory of your relation with this gentleman, the decision is easier to make.

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