Never Rent to Family Members: Exceptions?
First of many posts on the Bigger Pockets Forum! And an odd one at that to kick things off. I live in Nashville but am hunting for my first cash deal in my hometown of Dayton Ohio (have a few family members already). Meanwhile, unrelated to that, my sister and her family (+ husband + child + baby) are moving back to Dayton from CO in a few weeks to camp out at our folks house there while search for a rental. While still in the early stages of my endeavor, I made the potential connection of these 2 events. Being my first deal (aiming for buy and hold with priority on cashflow), I thought it could be helpful to have a "tenant" that would provide me easier access to the home for repairs as I fine tune details of the rehab, save the trouble and $ of property management, and have another excuse to hang out with family. My sister and her husband are detail oriented, thus would also naturally point out any flaws I need to address (which I realize could backfire to be super annoying but also could be helpful). A test run so to speak.
Now that I've let the idea sink in more, and heard several times to NEVER do this, I am leaning much heavier towards not. But I am still mulling it over to make sure I wouldn't create a win/win given a few clearly defined parameters, any of which may be enough for them to decide against before I do:
1) a commitment to NOT in any way alter what/where/how/when I buy according to them. It would be take it or leave it on a deal that fits my goals (but many of my goals happen to align with what they'd be looking for).
2) a shorter lease with the expectation of not being re-signed. This may be the deal breaker for them as no one wants to move...yet at the same time it would bide them time to keep searching?
3) A written understanding in the lease that there may be minor issues with the home that may take time to fix.
4) an agreement for rent to be slightly under market $ for the above troubles. I realize this would effect my cash flow goal, but think it could be worth that for just 6-12 months?
Even as I write this my gut says it's probably a bad idea, and can already hear you all yelling at your computer screen, but curious to get the thoughts of those more experienced. To be clear this was my idea, not theirs, that I proposed to them before I really had time to think it over (lesson there), but they would easily understand if I changed my mind and aren't counting on it as I told them it likely wouldn't line up timing/goal wise anyhow.
I look forward to much more interaction on this forum and learning from you all, while maybe helping some other rookies like myself!