Renting out my shop to nieghbor

[John M. Smith]

My nieghbor is a contrctor and wants to rent my shop to build a job of kitchen cabinets. I do trust him. Not worried about liability. Just trying to figure out how much to charge him. Also I will be building the doors and drawer fronts for him. At a profit of course. So I relly am just looking for how and how much to charge him. by the hour, day, or just a lump sum. Thank you John

[JohnT Fitzgerald]

My nieghbor is a contrctor and wants to rent my shop to build a job of kitchen cabinets. I do trust him. Not worried about liability. Just trying to figure out how much to charge him. Also I will be building the doors and drawer fronts for him. At a profit of course. So I relly am just looking for how and how much to charge him. by the hour, day, or just a lump sum. Thank you John


John - you're a pretty nice neighbor.

I strongly encourage you to look into the liability issue. Basically turns your shop into a 'place of business' by having him work there, and at the least you need to know what your exposure is if he gets hurt (no matter what the cause!). If he says he's covered, get a copy of his insurance to have on file.

There have been a few threads on this topic, I assume you could just search on some terms. Some suggested a $/hr rate, some suggested a flat daily rate, others suggested adding extra for any shop supplies or sharpening, etc. You might consider having him provide his own supplies (glue, tape, nails/screws, etc), and maybe some easily-changed items (such as TS or CMS blades).

I would also make it clear or well understood what he has access to, and what he does NOT have access to; cleanup requirements; hours of operation; and also timeframe.

[glenn bradley]

This is a situation where friends become enemies in many cases. This (http://www.jigsandjoints.com/our-bay-area-woodshop.htm) and others (http://forums.finehomebuilding.com/breaktime/business/shared-shop-space-established-woodshop-outside-boston-malden) will give you some idea on what to charge but, do get an agreement in writing and a waiver of responsibility that even the slimiest lawyer can't crack.

[Mike Cruz]

Yeah, the liability and friends issues would certainly keep me from doing it. Both scare me.

The small amount that you will make by doing this is nothing compared to having a bad neighbor, or a law suit.

I would recommend not doing it. I realize this isn't what you wanted to hear, and you specifically mention in your OP that you aren't worried about it, but I feel I would be doing you a disservice by not responding with my opinion about the subject.

Heck, when I was selling my TS, I had a couple of friends that were actually interested, but I wouldn't sell it to them because I knew they didn't know much about them, and I didn't want it on my concience if they got hurt with a saw (that was in perfect condition) I sold them. My friendship my more than the money I would make.

Just some food for thought.

[Stephen Edwards]

I simply wouldn't do it at all, based on past experiences. Not only do you have the liability issues, (as others have pointed out), the possibility of having a new enemy (who is a neighbor, no less!) you also will likely encounter another problem:

You'll more or less be forfeiting your shop space and shop time during the time period when your neighbor would be building the set of cabinets. You won't be able to work on your own projects because he'll have one or more machines tied up as well as his material and the assembled cabinets taking up shop space.

Regardless of what you decide, I certainly wouldn't allow him to bring any of his employees into the shop under any circumstances. None.

It's one thing to help a friend do a small project in your shop. The situation that you describe is something entirely different than that.

Now, if you're interested in taking on this job yourself, that's another matter to think about and possibly discuss with your neighbor.

That's my two cents. Good luck with your decision.

Best Wishes

[Glen Butler]

I would not do it either. Too many sticky situations. I am still friends with people I have turned away for similar reasons. I can't believe how much time I have spent teaching my brother about tool care and responsibility and he is already pretty savvy in the matter and a part owner in the tools. Other people just don't care about your stuff like you do.

[Glen Blanchard]

Add me to the list. All I see is ways this could turn sour (or worse).

[Van Huskey]

Count me in the "don't do it" side. If it would ease the tension of a refusal and you feel comfortable with the moral flexability then blame it on an "evil" third party, my choice would be my homeowners policy. If you know your agent at all you could get him/her to tell you "don't do it" and my personal moral dilemma would be avoided.

I live in a new neighborhood and am known as the guy that can do everything and has the tools for it. They give me too much credit but they watched me build my house. In any event I get the "can I come over and cut/plane/sand/drill/weld whatever" I always respond sure and when they get here I just DO whatever it is, they never touch a machine.

I just think the potential issues are much more serious than the potential upside.

[Terry Welty]

As an insurance agent, I have my concerns. Prior to any agreement, I would make sure that he has an insurance policy showing you as an additional insured on his policy. I would make sure to get a certificate of insurance showing liability and property coverage for the location. I would require a minimum $1,000,000 in liability. If he has any employees, I would want to make sure you are shown as an additional insured on the workers compensation policy as well. I would have him sign an agreement that he is responsible for any damage to your facility and contents... and I also would have him do a hold harmless agreement in your favor. Ideally I would want his insurance to be primary and non-contributory... If he is an established contractor, with insurance in place... he should be able to add the location and the exposure for very little cost... if he isn't insured it could cost him several hundereds of dollars due to minimum premium issues. Hope this helps!

[Mike Cruz]

John, obviously, you are seeing a pattern here, from liability issue, to friendship issues, to having someone mess up your tools (albeit unintentionally).

At this point, the best thing you could do is show him this thread. After reading it, I don't see how he would even want to go any further.

If money/funding is the issue, you should seriously consider taking on the whole job for him. You said you were going to get compensated for helping him anyway. Just tack on a little extra (whatever you were hoping to get by renting out the shop) to finish the project.

[Tony Bilello]

Neighbor or not, you need to charge a decent amount for your shop. I dont think you should charge top dollar but at least be in the ball park. There is no tellin how much of your shop space he will need to take over so be prepared for that. What would it cost for an equivelent space and facility elsewhere in the community? This is likely to be a short term thing, so a weekly rate would be sufficient. If he wants longer, he will offer you a monthly rate. The exact amount you should charge depends on your area and facility. Also put in a maximum date that the deal is finally over.
The only insurance I would worry about is liability if he should happen to damage your 'stuff'.
As for building doors and drawers for him, that needs to be a totally separate issue. No major discounts because he is renting from you.
I have sub-rented my shop to others and still do and never had a problem.
Sometimes I had written agreements and sometimes I didn't.

Curious question: How big and well equipped is your shop and if he is in business, how come he wants to rent your shop?

[Chip Lindley]

Since you are already doing the doors and drawer fronts, consider doing the casework as well! (what else is there??) Tell your neighbor it would be cheaper for you to do the WHOLE JOB rather than entertain all the liabilty insurance issues. He is a business man and will likely see your wisdom in the offer.

[Ken Shoemaker]

In "Mending Wall" Robert Frost says "Good neighbors have good fences". Well written wouldn't you say..???

I'm sure he's a great guy but ya' just never know. I lent a very good friend $400.00 that I would have thought there was never going to be a problem. Haven't seen him since that day almost 4 years ago... Over $400.00.... Really?????

Good luck with your decision.... Ken

[Aaron Hastings]

No way, no chance.........for every single one of the reasons stated previously.

Also, it sounds like he is using your shop for essentially small scale production, especially if rent is charged for space and use of machinery. This is probably against your homeowners/neighborhood association and might be against local zoning laws. Someone might be able to chime in more on this.

[Stephen Edwards]

No way, no chance.........for every single one of the reasons stated previously.

Also, it sounds like he is using your shop for essentially small scale production, especially if rent is charged for space and use of machinery. This is probably against your homeowners/neighborhood association and might be against local zoning laws. Someone might be able to chime in more on this.

I got a chuckle when I read your post, Aaron. You do make some valid points. It was just that I was reminded of how different things are in different places. Here, where I live out in the boonies in Tennessee, there are no homeowners/neighborhood associations nor any zoning laws whatsoever. We don't even have any building codes except for electrical and septic, which are state mandated.

This isn't the case in many town and cities across TN. However ,appx. 2/3 of the counties here have no association rules, codes or zoning laws. Sometimes I forget that things are different in other places!

[Paul Ryan]

Since you are already doing the doors and drawer fronts, consider doing the casework as well! (what else is there??) Tell your neighbor it would be cheaper for you to do the WHOLE JOB rather than entertain all the liabilty insurance issues. He is a business man and will likely see your wisdom in the offer.


I would try Chips strategy 1st. If that doesn't do it I would just let him use the shop, no charge, since you are making money on the doors and door fronts. Just make sure he understands you are doing a favor this time only. That way in the future he can repay you with a favor. I don't like the idea of charging friends money for help. Even if they are making money in this case. You can turn into enemies quickly by charging if things dont go right. And that way you have much less liability as well. That is what I would do. I have lent my shop for my neighbir many times and only ask for the favor the be returned when I need one.

[Steven DeMars]

Don't do it . . .

You will have zero protection from liability . . . .

Your home owners liability will deny coverage as soon as they determine a dollar has changed hands. . . You could easily be left in a bind . . .

Steve:)

[Mike Heidrick]

Throw him a bid to do all the work yourself.

[Joe Mioux]

Since you are asking for a rental charge and not whether or not to allow your neighbor the use of your tools, charge a percentage of sale.

Say 5 pct or whatever. I know in my real life business, many of my business peers say their rent is usually around 5-9 pct of their gross sales.

If it were me, I would be more concerned about my inconvenience. How long will this job take?

Or do a timed fee. For example, one week $199, second week 250, third week 300 etc. He will be motivated to get the job done ASAP as time is working against him.

What ever you do, a short term insurance policy is probably a good idea.

joe

or just do it for a case a beer and chalk it up to being a good neighbor.