We are family (Just like the song)

We are family (Just like the song)

Involved In Real Estate · Center Line, MI · Member since 2014 · 39 posts · 24 votes

In November I purchased a house free and clear that my aunt was renting because the owner was planning on selling it to a random person that was considering kicking my aunt out of the home. So I figured I would buy the house to help her and make a few dollars to help myself. I took it over and dropped the rent from $675 to $600 to "help her out". Fast forward to now and she owes me $300 for the water bill I paid off when I purchased it and $300 for half of the rent from a few months ago ($600 total) and to top it off she presented me with a list of repairs that she wants me to take care of namely painting the house and replacing the kitchen floor and carpet, although she never gave a list to the previous owner that was charging her more rent. Obviously I am not making any cosmetic repairs until she is current, but I'm in the position where if I do all of the repairs I am going to want to raise the rent to at least the market price point because that just makes sense to me.

Is it customary to paint and replace carpet while you have a tenant in the property or is that more of a process you take during tenant turnover times? I love my aunt and I want to help her but there has to be some limit to said help.

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Involved In Real Estate · My City, NJ · Member since 2013 · 181 posts · 81 votes
12y

Alton, Oh man, you got yourself in a pickle. I've been there, done that with family & rentals...99% of the time it doesn't work, and trust me you'll be the bad guy.

You're the boss now, it's your call if you want to invest more money. I've painted with tenants in place & put flooring in, but they were good tenants paying market rent.

I no longer will rent to family or anyone that I know. It's strictly business, I don't get too friendly with long term tenants either, I'm friendly, but they don't know anything about me.

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  • Involved In Real Estate · My City, NJ · Member since 2013 · 181 posts · 81 votes
    12y

    Alton, Oh man, you got yourself in a pickle. I've been there, done that with family & rentals...99% of the time it doesn't work, and trust me you'll be the bad guy.

    You're the boss now, it's your call if you want to invest more money. I've painted with tenants in place & put flooring in, but they were good tenants paying market rent.

    I no longer will rent to family or anyone that I know. It's strictly business, I don't get too friendly with long term tenants either, I'm friendly, but they don't know anything about me.

  • Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    12y

    That is why business and family doesn't mix! Good luck! Your in a pickle!

  • Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    12y
    Originally posted by @Alton Williams:
    Is it customary to paint and replace carpet while you have a tenant in the property or is that more of a process you take during tenant turnover times? I love my aunt and I want to help her but there has to be some limit to said help.

    Repairs that are necessary to maintain "habitability" need to be done whether the unit is occupied or not. For other renovations, it is most common to do so while the unit is vacant. However, for long term good tenants, it may be wise to do so while the tenant is in place as an incentive to keep them from looking for housing elsewhere. For tenants who are not abiding by the terms of the rental agreement, such as your aunt's situation, I would hold off on making any improvements and just tend to necessities.

    Renting to family can be problematic from a number of angles. One of course being if they are become non-compliant with the terms of the rental agreement, two if they expect any special favors or rent breaks that you would not customarily give to other tenants, and three if they can't understand your separate roles, as you are wearing multiple hats (nephew and landlord) which can significantly change the dynamics of the relationship. Also, check with your tax advisor. I believe there can be some tax ramifications if you rent to family below market value.

    Honest, clear and kind communication is the best. If I were in your situation, I would sit down with your aunt and explain your perspective both as a nephew and as a landlord. Let her know how much you care about her and see if she can gather support from other family members to help her get caught up with the rent. Help her understand the importance of fulfilling her part of the rental agreement. Share with her the conflict you are experiencing. Be firm and fair with her as you would with any tenant. Outline some steps she needs to take to get back on track and the steps you need to take if she doesn’t.

    Family relationships are important. Bless you for trying your best to help your aunt out when she was in a tough spot. Good luck in sorting this out!

  • Milwaukee, WI · Member since 2013 · 192 posts · 13 votes
    12y

    Good luck!

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