Renting a house owned by a family member?

Question

JD Martin · Answer

Sign separate leases with the aunt, each of you renting it per room with access to common space, so that when you guys break up and you move out the aunt doesn't have to be faced with either evicting her niece or having to accept the niece not paying anything to stay there. Then if/when you leave, the aunt can tell the niece she can either move out and she'll rent again to someone else, or get/accept a new roommate to sign a lease.

Karen O. · Answer

Two days ago, a guy asked for advice on helping his girlfriend possibly rent a condo to her sister's boyfriend's mother's niece.  Many of the posters suggested that it was a bad idea to rent to family and to family of friends.  It is a situation fraught with danger of causing rifts in friendships and creating stress in the family ties that bind.

So, as you're on the other side of the coin in this scenario, I'd recommend you rent someplace else from someone else.  If this is the only and best option and you actually meet her qualifications of income and other factors:

Negotiate the rent fairly.  Don't 'expect' her to give you a family discount.  Be grateful if she does.

Insist on a properly executed lease as it spells out expectations

Pay your rent, in full, on time, every time.  No excuses.  Don't try to penny pinch.  The property is a business for her and the income generated may be needed for her to make ends meet.

Don't be a nuisance tenant, do minor repairs yourself.  But let her know about big issues, like a leaking roof, bad water pressure or insect infestations like carpenter ants and don't attempt to fix without permission.

Don't let new residents come stay without permission (pets, friends or AirBnB guests).

If the owner has not indicated a plan to sell, then only mention once, after you've lived there a while, that you'd like to know if she ever decided to sell as you might be interested in buying.

Maintain renter's insurance.

I'm sure there are other thoughts, but these come to mind first.

I hope they're helpful.

Good luck.

Richard Sherman · Answer

@Patrick Crehan It could be a good deal for you.  If the aunt was asking I would probably say DO NOT rent to the family unless they are 150% the RIGHT people and you want to help them get some good experience etc.  The issues that everyone has is wearing the two hats of family and renter/landlord.  if things go badly, they are family, so you will hear about it forever and there might also be boundary issues (on your side or theirs.)  Also, remember, until you tie the knot you are just the boyfriend...so you better be a freaking prince or you will never hear the end of it.

LOVE the idea of lease option etc. BUT NOT UNTIL YOU ARE MARRIED...until then do NO combine your finances in any way!

Patrick Crehan · Answer

@marian smith She lives in Georgia and currently (what I believe from what I’ve seen) is milking the property with current renters. We live in Cincinnati so she would not be popping in frequently. She apperently wants the prop off her hands in the near future. Good reply Marian

@Marian Smithundefined

Patrick Crehan · Answer

Thank you all for the responses. Although some are discouraging 😅 I really appreciate it. Exactly what I was looking for

Katie Stewart · Answer

Hi Patrick! I personally would not rent from a family member as it can become a sticky situation very quickly. Rental investments are a business, and it's never a great idea to mix business and personal. If you can't come up with rent or you and your girlfriend break up, it's easy to default to "well you're family, you can make an exception to the lease this one time." This makes for an uncomfortable situation on the aunt's side... I would definitely pass if I were you.

Jaysen Medhurst · Answer

@Patrick Crehan, I have friends that have rented from family members. I wouldn't do it personally, I think there's too much potential friction, but that's your call.

Regarding lease options, you can propose anything you want really. For example, you agree on a purchase price at the time you sign the lease and have the option to purchase the property at that price at the end. Sometimes, you can even negotiate that some of the rent you've paid goes toward the down payment. The advantage for you is that you lock in the price now and potentially put some money towards the DP.

Before you go down that road, though, have you considered house hacking a multi-family property? Now's the time to do it. Great opportunity to start building wealth at a young age.

Renting a house owned by a family member?

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