SHOULD YOU RENT TO FRIENDS OR FAMILY MEMBERS?
IN TWO WORDS: ABSOLUTELY NOT
As a property owner with rental property, there’s not much worse than an extended vacancy in one of your units. If finding a reliable tenant seems daunting or has proven difficult, it can be tempting to rent to friends or family. Perhaps someone close to you knows you have an available unit and they’ve come asking. No matter what the situation, our experience based advice is still the same: DO NOT RENT TO ANYONE YOU ALREADY HAVE A RELATIONSHIP WITH. Saying “no” might not be easy, but it’s the most effective way to handle the situation and avoid inevitable headaches down the road.
LEARN MORE: HOW TO RENT YOUR APARTMENT: STEP BY STEP
SHORT TERM VS. LONG TERM
As a landlord it might seem like renting to someone you already know and trust is the path of least resistance, and in terms of finding and placing a tenant initially, that may be true. But as smart investors we know that short term wins aren’t worth long term problems. And if you’re doubting the inevitability of those problems on the backend, you’re only fooling yourself. Regardless of the strength of your relationship with a potential tenant, that relationship changes drastically when they now owe you monthly payment and you have to maintain a business relationship, which only exists if you consistently hold all tenants to the expectations spelled out in their lease.
We see it time and time again…tenants lean on landlords they have previous relationships with in terms of asking for favors (I’m out of town but really need the walkway shoveled so it doesn’t freeze over…can you just stop by quick), time (I’ll have the money next week, you know I’m good for it), and forgiveness (we’ve known each other for how long? …it won’t happen again). More often than not, you enter this relationship as friends, and leave it as enemies. The simple risk of ruining a personal relationship is not worth it…on top of the added financial risks.
BREAKING FAMILIES APART
Real estate investment is a long haul and it requires patience and consistency. There is no one we’re less patient with than our family members.
We’ve seen property owners rent to siblings and conflicts blow up to where their parents are then taking sides and the property owner just wants to sell to bury the hatchet. We’ve seen property owners rent to their nieces and nephews and any issues get bumped up to their parents (the owner’s brother or sister) and again you’ve got a multi-generational conflict that ruins Thanksgiving, Christmas, and Easter for a year or two.
Being a part of a family means supporting each other and covering for one another when times are tough. You want to be able to do that for your family…but as a real estate investor, you can’t operate that way with any extended success. It just isn’t feasible.
LEARN MORE: SHOULD YOU HAVE CAMERAS IN YOUR RENTAL PROPERTY
JUST SAY ‘NO’
No friends, no family, no colleagues…if you already have a relationship that you value in any way…just say ‘no’. The people you know might be trustworthy, but so are the vast majority of strangers. With a property manager in your corner to help you solicit and screen applicable tenants, or a system of your own that includes a basic background check, you can find reliable people. Part of this also includes adding value to your units to attract the right tenant.
There are no shortcuts to success in real estate or real estate investment. If you have a quality space at an appropriate price, you’ll attract strangers that have no other expectations from you other than those outlined in the lease and general law. You’ll provide them with a comfortable place to live and an avenue to communicate when necessary, and they’ll pay you rent regularly. Although it might seem easier to lean on your personal relationships to help fill vacancies, it will make it impossible to maintain the all important business relationship needed to invest and manage property effectively.
If interested in learning more about the opportunities that professional property management can bring to you and your properties, contact our Nexus Property Management® team at any of our four New England locations.
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Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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