Are you thinking about renting to friends? You may want to think again.
We all have a friend that we would do almost anything for, but should that extend to renting them a house? The answer, in most cases, is a resounding no. The last thing you want is to create tension or even ruin a friendship over tension and hurt feelings. If you are considering renting to friends, having a property management company to hold them accountable and have those hard conversations for you may be the answer.
As a property owner, you may feel like the scenario couldn’t get any better. I mean, shoot…they’re your friend, right? They will take care of everything! It will be great, they will stay here and take care of the house while you collect rent. It’s a win-win!
Unfortunately, that’s not always how the story plays out.
Here are some reasons why you want to re-think renting to friends and family.
They whine…about every… little… thing! You may think that your investment property is pretty nice but often friends won’t hold back on giving you feedback, especially when it comes to where they lay their head at night. Before you know it, you’ll be getting calls and texts asking why the ice maker isn’t working, or complaining about the fact that the neighbor is throwing a party again. Yikes! And because you are renting to friends, you may feel obligated to fix every little thing immediately to avoid upsetting them. Save yourself the headache of putting out fire after fire for your friend and get a property manager involved. They’ll be able to keep the peace by taking care of any issues in a reasonable timeframe.
They may or may not care. Remember, it isn’t their home. They may not care that the dog chewed up the carpet. Your friend might assume that you will still love them and that a simple oops! will solve everything. Finding a tenant that cares about your home is already difficult enough without adding friendship into the mix.
You may not see that rent check on time. Eeeshh…this one is a biggie! Renting to friends may mean that they won’t find it absolutely imperative to pay their rent on time. They might not necessarily be trying to take advantage of you, but they may assume that because you are their friend you will understand. What they may not be taking into consideration is that when the rent is late, YOU have to still pay the mortgage. Most investors rent their homes so they won’t have to pay the mortgage on it. Your tenant’s choices affect you, and you don’t want to be put in the awkward situation of calling them out.
Your friend has friends and family, too. Yup, your friend may also want to help their loved ones out, which might lead to letting them stay the night. That friend may stay the night after that, and the night after that. Before you know it, you’ve got another person living in your home that isn’t on the lease. Nice, huh? Well, just realize when you rent to friends it become more difficult to stick to what’s on the lease and what been agreed upon.
If things go south, EVERYONE will know. Loyalty can get thrown out the door when a disagreement related to the rental property happens between friends. Before you know it, the guy that bags your groceries will know what happened when you tried to collect on the late rent. It might even end up looking like a scene from Judge Judy!
Obviously, these are pretty dramatic scenarios of what could happen if you are renting to friends. Not every friend or family member will fit this profile. However, it is strongly suggested that you don’t rent to anyone you have a relationship with without having a mediator, like a property manager, to help out. Not only will it make things better in the long run, but you won’t have to deal with a lot of the awkward day-to-day details.
If you choose to rent to a friend, just make sure to have your ducks in a row. Hire a property manager to take care of the agreements and legalities. Tell your friends that the property manager is the first point of contact for any issues they may have at the rental house. This will help ensure that you aren’t risking your relationship or your financial security.
Do you have experience renting to friends? Did it turn out ok in the end? Share your experiences with us!