Landlord Basics – Part I: Don’t Rent To Family Or Friends.

By
Real Estate Broker/Owner with KGC Properties LLC, Tucson Property Management & Real Estate

A while ago – well maybe longer than a while ago – OK back when I bought my first investment property – I thought it would be a great idea to rent one of the units to a friend. He was down on his luck, recently divorced, needed a year to get back on his feet, had a good job and I’d known him for years – just an all-around good guy. 

Just two months into the lease: police calls, trash/junk violation notices, damage to the unit and more. It was driving me nuts trying to figure out how to handle it!  I know, anyone can do this – but it’s much harder to deal with a friend or relative when there are problems like this.

As with so many things, trying to make something business-related work with friends or family can backfire.  Regardless of having a lease, friends and relatives might assume that you will give them a break and that “rules don’t apply to them”.  They will do things thinking that it doesn't matter because they "know the landlord"  In the end, friends and family expect your personal relationship to come first, and if you try and follow the rent-related matters, your personal relationship quickly becomes strained.

And if the rent related matter is “non-payment of rent” – that usually ends the relationship.  Bottom line policy – don’t rent to family or friends.

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Buying or selling Tucson real estate, Mt Lemmon, Tucson bank-owned homes, Tucson rental homes, or Tucson lease option homes? Visit www.KGCPropertiesLLC.com .

                                                 

 

This blog is written with my opinions and my opinions are  presented with accuracy but not guarantees. Please talk to a professional before making any real estate, financial or agency decisions.    Gabrielle Kamahele Rhind - 2014. If you want to reprint parts of this - just email me for my permission: KGCProperties@gmail.com .

 

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Rainmaker
1,463,117
Sally K. & David L. Hanson
Keller Williams 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Short Sale - CDPE, REDS

Kinda like lending money...which unfortunately often ends up to be the same thing...either way, instead of being the good gal, you somehow end up on the wrong end of the relationship for expecting them to be responsible.

Oct 02, 2012 05:50 AM #1
Rainer
286,335
Dan Hopper
RE/MAX Alliance, www.danhopper.com - Westminster, CO
Denver Realtor Advocate/Short Sale/Loan Modificati

Set the groundrules up front.  Make it clear to them that you may be family or a friend, but DO not expect favors that result in poor performance of  a contractual agreement.  They may have expectations that you will give them a break, clear that up in the beginning, and that you have expectations of them, too.  If any favor is to occur, work that out in the conractual terms, less monthly rent, extra days to pay before late penalty, etc.

 

Oct 02, 2012 05:58 AM #2
Rainmaker
389,516
Larry O'Sullivan
Rocky Mountain Realty, Sandy, UT - Sandy, UT
We get homes sold

Gabrielle - very good points. Been my life experience also. Ground rules very necessary. Perhaps why in most family trees a lot of nuts are to found.

Oct 02, 2012 06:08 AM #3
Rainmaker
236,784
Doug Dawes
Coldwell Banker Residential Brokerage - Georgetown, MA
Your Personal Realtor

It is a hard thing to NOT do. I agree with Dan though. Make sure it is understood that there will be no favoritism. The rules are the rules and they are same for all.

Oct 02, 2012 06:10 AM #4
Rainmaker
123,260
John Sposato, Sharon Coffini & Melanie Didier
The Arizona Home Group - Chandler, AZ
Arizona Home Group

Personally, I feel an extra responsibility to perform when I am the recipient of a friend's business relationship and am stunned when I hear stories like yours.  I have a friend who is dealing with a situation like you had described.  She is renting to a co-worker and discovered he had trashed the place.  Crazy!  So sorry to hear it happened to you!

Oct 02, 2012 06:13 AM #5
Rainmaker
409,905
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease

Gaby, 

VERY TRUE!  I helped a new landlord a few years back who is so thrilled to have a non friend, non acquaintance, non family member in his place who pays ON TIME, EVERYTIME!  His last "friend" wasn't paying rent, as they told the wife, they needed money to buy the items they wanted to take back to their mutual home country!!!!!  The tenant thought it should be no problem as the owners had enough money and she needed her money.  Priceless.  That's not a friend, that's a moocher!

All the best, Michelle

Oct 02, 2012 06:58 AM #6
Rainmaker
2,116,231
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"Franklin MA Homes"

Good morning, Gab...  good advice for everyone....if you're going to rent to family, keep a close eye on things...

Oct 02, 2012 07:08 AM #7
Ambassador
1,248,954
Paul Henderson
RE/MAX Professionals. - Tacoma, WA
I always put my clients first in any transaction!

Gabs, We all learn this lesson sooner or later. That's why I use a property manager, let my moocher deal with my pit bull; so to speak. I love my property manager but I don't call her the 1st 15 days of the month...

Oct 02, 2012 02:47 PM #8
Rainmaker
1,838,656
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
CRB, CRS, CIPS, GRI, SRES, TRC, e-PRO

Gabrielle

Short and right to the point . . . . Save the relationship and don't rent to family or friends.

Good luck and success.

Lou Ludwig

Oct 02, 2012 07:39 PM #9
Rainmaker
1,037,361
James Dray
Wise Custom Realty - Bentonville, AR
AR., MO., or OK. I can find the home for you.

Morning Gabrielle I'm with you on that one.  I also have a problem listing properties for friends or family that can cause problems in of themselves.

Oct 03, 2012 03:29 AM #10
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Rainmaker
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Gabrielle Kamahele Rhind

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