Who rents to family and friends?
How has that worked out for you?
Personally, I won't do it. I know my family and they can be a pain in the ***.
My first Contract for Deed has just started with my Best Friends younger brother. Who I do trust.
Another example, I know a man who owns a 6 unit in Chicago and 4 of the units he has rented to family. They basically have all lived there for 20 years and it has not been a problem.
I would like to hear people's experiences.
Mainly the good. I know it is easy to hear about the bad, and how this cousin ruined my apartment.
I don't have any good. Sorry! I have been considered a hard *** from "joe shomoe". On the other hand my tenants have no issues. So I have learned to not mix them because than people don't get upset because it is "just" business.
@John Van Uytven I have been presented the opportunity but figured out a way to pass because I'm not sure it would work out too well. Just too many variables in play with residents already and to add family into the mix I'd rather avoid it if I can.
That said, my sister rented to my mom and it went really well. In fact, my mom ended up buying the property from my sister and her husband.
@John Van Uytven I did it once as an act of mercy. The relative was living with my dear grandmother and I had a vacancy. It went about as bad as I expected and I non-renewed at the end of a year. I NEVER would have done it other than in those circumstances. That was me "taking one for grandmaw."
The good part of that story was that is was a huge relief to my grandmother!
We have a friend living in one of our rentals. In 2 years we have had only one issue. His wife cleaned out their bank accounts when she left him. He paid 1/2 the rent on the 3rd (first paycheck after she left) and the balance 2 weeks later when he got paid again, with the $50 late fee. Knowing the circumstances, and since he told us ahead of time about the issue, we returned the late fee.
I would not rent to family with the intent to make money. It would be asking for trouble. I did buy my mom's house after my dad died and rented it back to her, but the purpose was to take care of my mom, to help her stay in her own home as long as she was physically able. That worked very well.
I get lots of calls from people who have rented to family or friends and want out.
You can not consider it a win-win situation.
That said, I could see myself doing it with full expectation that it will likely be a lose-win situation, if I knew I would not hold it against the family member or friend.
It is sort of like lending money. I do lend money to family and friends, but in my mind it is given not lent. If they repay, great. But I will never ask for it back. And I only lend what I would be comfortable never seeing again. And I will not begrudge it. In my younger days I'd even lend small amounts of money to casual friends this way. The benefit is that if they don't repay (again, I wouldn't ask for it but I'd always let them say they'd repay me) then the next time they come around I could always say no because they never paid back the first time. No animosity. Just no.
I've heard the expression that you don't want to lend money to anyone you have to sit across a Thanksgiving table from ;)
I have been renting out our house to our niece and her husband for over two years now and it has gone fine. Just follow all of the same guidelines as you would when renting to anyone else. I think each situation is unique and really depends on the individuals. There are some family and friends I would not rent to and there are some that I would. You just have to use your better judgement.
We rented to our daughter & her friend (there first place) it was horrible. They moved on and now two years later they are back with a new outlook on life. They now realize how expensive life is and that we were actually giving them a great deal and that there are rules everywhere. They are great tenants now. Our daughters friend, "She can move out if she wants but I'm never leaving again." However, they did teach me not to rent to first time tenants ---is that discrimination????
Really Good stories
Thanks for sharing everyone.
It was interesting to see what has happened.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing