Renting to Friends or Family? How to Make It Work

Whether you have a short-term vacation rental or a long-term unit, there is always the possibility that a friend or relative will ask if they can move in as a tenant. This is a tricky situation both for landlords and prospective renters. It’s fraught with potential trouble in your relationship as well as financial pitfalls.

If you do want to have a friend in a home that you own, how can you help ensure a smooth and successful business relationship? Here are five ways to accomplish it.

Have a Screening Process in Place

Is your relative a high risk as a tenant — such as being chronically broke and late on their rent, having evictions on their record, or being without sufficient job prospects? Then the easiest way to decide whether or not to let them rent from you is to use your existing screening policy as you do with all tenants.

Let your relative know your standard requirements and then they can decide if they want to move forward. If you don’t have a process already, contract with a property manager who has one.

Sign a Rental Agreement

Just like you should use your standard screening process you should also use a standard rental agreement.

This contract spells out things including:

  • When rent is due
  • What standard late penalties are
  • When a security deposit is due
  • What condition the unit should be in upon termination
  • What aspects of the home the tenant is responsible for
  • What your expectations as a landlord are

Take the time to go over this contract in some detail so that everyone is on the same page.

Then, enforce the agreement’s rules as things come up. While you want to be reasonable, keep in mind that the more small things you let go, the harder it will be to enforce the big ones that could cause more serious problems.

Use Property Management

No matter whether you screened your friend as a regular tenant, you can also create a more business-like relationship by using a property manager.

Property management services, if you don’t already use them, can collect and deposit rent, receive and handle tenant phone calls or concerns, and arrange for maintenance on the unit. This leaves you and your friend to enjoy a personal relationship without letting the day-to-day concerns of a landlord and tenant relationship get in the way.

Have Services Done

If your relative doesn’t care for their home and yard in the same way you do, it can become a source of friction to both of you.

Protect your rental unit and your relationship by arranging for some maintenance and upkeep to be done by outside parties instead of relying on them. Landscaping, for instance, is an easy thing to outsource — and you won’t have to be annoyed when you see that your relative doesn’t keep up the yard.

In addition to the yard, schedule regular servicing of the appliances, routine carpet cleaning, and pest mitigation. Contract with a local handyman to inspect the property once per quarter or so, so you ensure that nothing is left to grow into a bigger problem. The additional cost of some services is an investment in preserving your good relationship.

Know When to Say No

The hardest thing to do is to say no, but sometimes it’s the best thing — for yourself and for them. If your relative is highly unlikely to be able to pay, will be a problem tenant, or makes lifestyle choices that would be bad for your family to be around, you may need to avoid renting to them at all.

If necessary, offer to help them find another place to rent. If money is the issue, perhaps you could pay the security deposit or last month’s rent as a gift — which would likely be a lot cheaper than having your own problem tenant.

Follow these best practices to help protect your rental property and your home life. At MacPherson’s Property Management, we can help.  Call today to learn how we can make renting to friends and family — or not — easy and painless.