Who is paying for utilities?
Put together a lease and make it about business, not just helping out someone.
At $1700 vs $1950, it is fine. Do not replace the carpet floors to save yourself the money. At $1700 you are losing $3k a year. Until you can rent it for more money and the profit can justify the replacement.
@Patrick Fraire Look at it from an upside risk to downside risk.
How much does putting the family in there now save? The cost of replacing the floors (if they have to be replaced to rent the place) plus the mortgage payment for the number of months it will take to get it rented.
Worst case downside risk is lost rent ($250/month for however long you think they'll stay) and the time/expense of evicting them if things go south. Add on the soft cost of your gf having to evict her bf's cousin and the associated fallout from that situation.
If the hard costs come out to around each other I'd say no due to the soft cost of renting to family, but that is just me.
Emotions have no place in being a landlord .
It is her property and her money. You should not be getting in the middle of it as you will get blamed if things go south.
Family is family and if aunt will co sign perfect! Do that! have tenant pay all utilities.
If there is no vested interest, I will let someone solve her problem.
Originally posted by @Matthew Paul :
Emotions have no place in being a landlord .
Sure they do. Just depends on how and why they are used.
But you say these folks are moving from another state, have bad credit and can't afford a deposit. And need an aunt to co-sign.
This all means they can't afford the unit.
The monthly loss = $800/mo (2500-1700). Your GF would be supplementing her sister's boyfriend's cousin to the tune of $9600/yr. What?
Wanting to be helpful is great. Giving away almost 10k is excessive. And what happens if her sis and Beau breakup? Or the boyfriend's mom doesn't come through when cousin decides to do Disney rather than pay rent?
This seems easy.
Don't rent to family and family of friends - who can't afford the unit starting out - unless you just want to give $ away, want to break the family ties or the friendships.
1. NEVER rent to friends and family because no matter what you give them it will never be enough and in the end they will not be friends .
2. If your girlfriend decides to rent to them anyway, go through the normal rental process. Do they have a job? Income 3X rent, even the lower rent? Co-signer have funds to afford 2 rents--her home and the co-signed rental? Are you willing to loose that relationship when things blow up? No deposit means any thing ruined will be at your expense. How does their old house look? And references for it? Domestic issues can make a lot of holes in walls! Check out their credit and criminal background. Do they meet your rental standard?
3.. Then if you are still considering going ahead, can the co-signing relative provide the deposit? If they are such good folks, someone else should be able to vouch that they will paid their rent, not destroy the house, leave it clean when they leave. They will get the $ back when they leave...with a clean house.
4. Rent, now, do they already have jobs, or are they getting them? Co-signer know that money is required each month and willing to pay it? Are they living off savings? You need to ensure that rent will be coming in. Then maybe say you will rent for the lower price for 3 months to let them get settled in, then the rent goes up to $2000 and they should get a part time job, recycle bottles, whatever to earn the increased amount.
5. DO NOT DO A LEASE--put it month to month so you can dump them when it does not work any longer.
6 Review number 1 above.
BTW, make sure you change the home's insurance to rental, not owner occupied.
I have nothing productive to add but for the benefit of the thread, a sister's boyfriend's mom's niece is not family (even in the South where I live and family trees don't branch much).
don't mix family with business. if they have poor credit, there is more to it than meets the eye. they will be lax with payments 'cause family and your girlfriend will foot the entire mortage. If they can't afford 1,900 they should be looking at some C class 1,200 small place until they get their act together.
Tell them you are not renting the condo, it will go up for sale. Then rent it out to someone else, or sell it.
I wouldn't do it, even if they promised to pay 1,900 because I know they will default down the line.
If she goes ahead and rents to these losers please keep us informed. Being able to tell her I told you so will be your reward.
Here is my prediction........January rent will be late...excuse - Xmas expenses for kids. February they will stop paying. By March her sister will break up with her boyfriend, the boyfriends mom will be gone with the wind. Good luck trying to evict the dead beats.
Some how she will blame it all on you and expect you to fix it.
Your gf is not cut out to be a landlord.
"No good deed goes unpunished" You will loose money, sleep and probably a relationship if you do this. She needs to sell the condo and use the money to help HER FAMILY if she really wants to. People are creatures of habit. They have bad credit for a reason and if they can't afford the rent in your city they need to move somewhere they can afford. You are in a no win situation and if you are feeling generous give them some money to help out. Good luck.
- Not knowing the entire family history and why the family is in a situation they are in today it's hard to comment.. but my 2 cents
- Your GF can probably still help them by finding an apartment they can afford - I am sure if they look hard enough they will find some place that will allow them with no so good credit - perhaps with slightly higher deposit.
- Have the Boyfriend's mom put up for the deposit on the above property if she really cares so much about her niece and is confident to co-sign.
It doesn't seem like a good deal even if your gf rents it at 1950 right? Still cash flow negative. Way cash flow negative. Why would you put new floors in a place you're going to lose monthly in already? I see people responding to your questions about the 1700. I agree with all them. If it was me I'd list it and find a tenant that qualified. One of this girls friends or family should put her up. Good luck
Your girlfriends sisters boyfriends mothers niece? Don't worry, Christmas wont be ruined if you decide not to rent to them.
Updated 2 months ago
The mobile app doesn't register line breaks, sorry for the lack of paragraphs. Basically, DON'T do this unless you're prepared to both lose money and probably strain relationships as well. This sounds like a bad idea in general even if it wasn't going to lose you money every month (which it is.) The fact that you're losing money every month (and you're not even including repairs and whatnot!) makes this a definite no. Again, if you're determined to "help," then buy a cheap house that you can rent to them for cheap. Don't put your $400k property on the line, sinking thousands into it. Even if they said it would only be for a couple months, they're gonna love living there for free, and problems will arise.
NOPE. NOPE. NOPE. You've answered your own question with the first 4 words of your post:
Negative $800 Cash flow...
Family/friends + landlording DO NOT mix. Take it from the experienced folks answering your post. We've all been burned or are still on fire.
Good luck + Happy Holidays!
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