The other day on the radio with Holly Swogger and Jo Garner we were discussing some landlording basics. One of the topics of discussion touched on renting to friends and family members. Here is the main point and conclusion of that discussion. Do not rent to friends or family members!
Renting to friends or family members seems like a good idea at first. You know them. You do not have to do a background check on them. You know where and if the work. You “know” they will make a good tenant. And just possibly, they might.
But, what if they loose their job? What if they just stop paying the rent? Are you prepared to kick them out? Are you prepared to take them down to eviction court and then set their stuff on the street? If so, what do you think will happen to the relationship between you and your friends and family? Who will end up being the bad guy in this situation? You will.
The best way to avoid the above situation is to simply not get into it in the first place. Do not mix your friends and family with your real estate business. It can lead to some real disasters. My fellow radio hosts and I have all talked with people who own rental properties they want to sell. When we ask what they are getting in rent the answer is often $0 because the tenant is their son, daughter, niece, whatever and they can’t bring themselves to kick them out.
Is that a position you ever want to be in? I don’t think so. So avoid it on the front end. Be a smarter landlord and avoid renting to friends or family.
