I’m a big fan of barter, but if you’re going to accept barter in exchange for rent, you’d better make sure that at least part of the deal involves money. For example, if you’re renting out your room at $350 per month, you might make $250 payable in currency and $100 in labor. I prefer to have the majority of the rent payable in money. On the rare occasions where I’ve accepted more than half the rent in the form of labor, I’ve gotten burned.

I’ve found that people don’t appreciate what they’re not paying for. A deal that involves no money often seems informal enough to not be taken seriously. Many people believe that if no money is changing hands it’s not a real contract. It isn’t so. As long as something of value (in this case, the use of your extra room) is being offered and something of like value is promised in exchange, it’s a contract. ¬†It can be enforced in court, although if there’s a judgement for or against you it can be difficult to collect labor or negotiable goods.

I prefer that barter agreements are based on labor, not goods. It’s hard to put an accurate value on items that are being traded. Even if you or your tenant is a professional appraiser it’s not easy. Is that old chair an “antique”, or is it junk? Not everyone can tell. Labor, however, is easy to value. There’s a going hourly rate for every kind of work people get paid to do, from child care to brain surgery. You and your tenant can negotiate the kind and amount of work to get done, and assign it an objective dollar value. That dollar value should be higher than the tenant would get if she were employed hourly to do the work, but lower than you would have to pay if you hired a service to do it. That way, your tenant knows exactly how much rent is due by cash or check, and how much is due in labor. The amount should never be flexible. Your tenant should never have the option of unilaterally deciding to “work off” an extra hundred dollars of rent that you may be counting on to pay the electric bill.

The other reason I prefer to barter for labor is space and the time value of money. Even if I knew how to correctly value the items I receive in trade, I don’t have space for, or a use for, a new piece of antique furniture or a used television every month. Bartered merchandise is only useful to the extent that you can turn it into currency or something that benefits you. If you can’t do that, then what you’re doing, isn’t business. It’s charity.

Further along in the same line of thought, I think it’s important to barter only for the kind of labor you can actually use. If a tenant wants to paint her own room because it needs a fresh coat of paint, that’s different from wanting to paint it because she’d prefer a different color. I don’t pay tenants solely to make cosmetic improvements in their own living area. Now, if they want to paint the living room or the kitchen¬†and the work needs to be done, great.

In the past I’ve occasionally had to monitor tenants’ labor and make sure they’re doing the work they’re paid to do, in the way they’re being paid to do it. I once had a tenant who was supposed to take buckets of water from the rain catchment barrels and give it to my fruit trees. Instead, the moment my back was turned, she watered the trees with the garden hose. As a result, the catchment barrels were overflowing, my water bill was very high, and the trees didn’t get their nice, nutritious rain water. I had to redirect the tenant a couple of times, and when she still refused to carry the water “because the hose is easier”, I had to give her a different type of work and carry it myself. Luckily, I had other kinds of work that needed to be done, that were worth about the same dollar value.