Friday, November 02, 2012

Keeping it in the family- Should you rent to family or friends?

There seems to also be a lot of controversy around renting to family or friends and everybody has an opinion on whether or not it’s a good idea. There can be benefits and disadvantages to having a close friend or family member as a tenant, regardless if it is through an agent or self managed.     
For most landlords it is the comfort of having someone you know in your property. It really is the best reference and background check you could have to know your tenant personally before putting them in your property, and with friends or family this is possible. 
“Renting to a family member or friend may seem like a good idea at first, but all too often the tenancy ends with one party feeling like they were taken advantage of, or neglected”    (Salvatore Friscia, San Diego Premier Property Management, San Diego, CA, 2011).
Issues:
“In some cases the owner/landlord will typically relax qualification measures and make concessions based on the relationship, including not requiring an application, security deposit or even lease agreement. This may seem like the owner is doing the tenant a favor allowing for an easy rental arrangement, but in actuality both parties are now at risk without contractual agreements in place detailing the tenant’s and owner’s rights and obligations.”  (Salvatore Friscia, San Diego Premier Property Management, San Diego, CA, 2011) So ensure you follow all typical procedures including reference checks, lease agreements and security bond deposits.
Friendship or landlord/tenant relationship:
There is a big difference between a friendship and a landlord/tenant relationship. Understanding this difference can be difficult because suddenly you have wants and needs in relation to your property which may not coincide with your tenant’s wants and needs. For example you may have never had issues with renting your property without air-conditioning but now your friend wants it and expects that you understand why. On your hand you do not want to pay for a cooling system when you could have found a tenant without it. The lines of friendship are blurred because of your personal relationship and want of understanding from the other party.    
Expectations:
Will you be lenient on the tenant? Do they expect that you will? The expectations from each party could differ. There needs to be clear expectations set from the start so you are both aware of what is to happen.  Let them know you want the rent on time and wont accept excuses, conversely the tenant will expect you to respect their privacy, not to show up unannounced or too regularly.
Is your perception of what is clean the same as theirs? Will they look after the garden like you expect they will?
Benefits:
You know the person in your property and trust they will look after your property. There is a certain amount of security you feel knowing the person well and how they live.  The tenant will also feel comfortable dealing with a landlord whom they know and also trust to look after there needs during the tenancy.
Not all situations have a negative outcome however the downside of a negative experience may cause long term consequences that can affect relationships and family ties.

3 comments:

Kate Smith said...

Understanding A Rental Agreement

MN Real Estate said...

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commercial property london said...

I mean it is up to you whether you rent your property to family or friends or strangers outside the family. It depends on your needs, thinking and overall scenario.