Is "renting to family" good or bad?

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Is "renting to family" good or bad?

Champ Leong
Investor 路 Birmingham, AL 路 Member since 2020 路 82 posts 路 27 votes

I suppose the bottom line in renting to family is whether or not I trust them. If a family member owes me money now and keeps on coming up with a reason why they can't pay, what makes me think they will pay rent on time? OPINIONS PLEASE!

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Nathan GesnerBusiness Member
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Real Estate Broker 路 Cody, WY 路 Member since 2010 路 28k+ posts 路 41k+ votes
4y
Originally posted by @Champ Leong:

I suppose the bottom line in renting to family is whether or not I trust them. If a family member owes me money now and keeps on coming up with a reason why they can't pay, what makes me think they will pay rent on time? OPINIONS PLEASE!

I regularly warn against this. If you have a strong relationship and they are 100% trustworthy, then this may be a viable option. You've already determined they aren't financially reliable, so I would avoid it at all costs. If things go south, you could end up losing the relationship and money. And if other family members starting picking sides, you could lose a lot of relationships. 

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker 路 Cody, WY 路 Member since 2010 路 28k+ posts 路 41k+ votes
    4y
    Originally posted by @Champ Leong:

    I suppose the bottom line in renting to family is whether or not I trust them. If a family member owes me money now and keeps on coming up with a reason why they can't pay, what makes me think they will pay rent on time? OPINIONS PLEASE!

    I regularly warn against this. If you have a strong relationship and they are 100% trustworthy, then this may be a viable option. You've already determined they aren't financially reliable, so I would avoid it at all costs. If things go south, you could end up losing the relationship and money. And if other family members starting picking sides, you could lose a lot of relationships. 

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  • Champ Leong
    OP
    Investor 路 Birmingham, AL 路 Member since 2020 路 82 posts 路 27 votes
    4y

    @Nathan Thanks! Makes tons of sense.

    0Reply
  • Scott M.
    Real Estate Broker 路 Rochester Hills, MI 路 Member since 2009 路 2k+ posts 路 2k+ votes
    4y

    100% No.  This isn't about if everything goes right and I suppose for most the odds are in the favor of going right....this is about if things go wrong.  It will get weird, awkward and other family will get involved and could have real world consequences.  Odds of emotions getting involved for one or both of the parties is to great.  Downside is to great.  

    5Reply
  • Champ Leong
    OP
    Investor 路 Birmingham, AL 路 Member since 2020 路 82 posts 路 27 votes
    4y

    @Scott M. Thanks Scott!

    0Reply
  • Adam Martin
    Rental Property Investor 路 Member since 2020 路 1k+ posts 路 1k+ votes
    4y

    If someone shows you who they are believe them.  They are telling you they are bad with money and prioritize other things besides paying you back.  I don鈥檛 know why you would consider this being different but I can assure you it won鈥檛 be.  State it is a business decision not to rent to friends or family and stick to it.  

    4Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant 路 San Diego / Phoenix 路 Member since 2021 路 12k+ posts 路 15k+ votes
    4y

    You already know this, but NO!!!!!

    3Reply
  • Theresa HarrisPro Member
    Member since 2019 路 15k+ posts 路 11k+ votes
    4y

    If they owe you money, I wouldn't trust them.  Tell them they need to move and find a place they can afford otherwise you will proceed with an eviction.

    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant 路 San Diego / Phoenix 路 Member since 2021 路 12k+ posts 路 15k+ votes
    4y

    Wait - I just saw that they already owe you money and you're still considering renting to them..... Seriously?

    4Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent 路 Washington, D.C. 路 Member since 2012 路 17k+ posts 路 30k+ votes
    4y

    Never rent to family or friends

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  • Joe S.Pro Member
    Investor 路 San Antonio 路 Member since 2020 路 3k+ posts 路 3k+ votes
    4y
    Originally posted by @Champ Leong:

    I suppose the bottom line in renting to family is whether or not I trust them. If a family member owes me money now and keeps on coming up with a reason why they can't pay, what makes me think they will pay rent on time? OPINIONS PLEASE!

     It鈥檚 typically not advisable. How are you going to evict cousin Fred and Uncle Ned For a breach of lease? 

    1Reply
  • Gail K.
    Augusta, GA 路 Member since 2014 路 1k+ posts 路 1k+ votes
    4y

    Not a good idea.  Uncle Fred and Aunt Marge owing you a ton of rent does not make for a happy Thanksgiving around the dinner table.  Someone might end up throwing the turkey at someone. 

    3Reply
  • Eron A.
    Member since 2018 路 88 posts 路 43 votes
    4y

    depends on the character and personality of the family.

    0Reply
  • Bjorn AhlbladPro Member
    Investor 路 Shelton, WA 路 Member since 2017 路 6k+ posts 路 6k+ votes
    4y

    I don鈥檛 recommend it. But i rented to my mil who was a model tenant for 20 years. Who knew?

    0Reply
  • JD MartinBusiness Member
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    Rock Star Extraordinaire 路 Northeast, TN 路 Member since 2015 路 10k+ posts 路 16k+ votes
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  • Josue Vargas
    Real Estate Agent 路 San Antonio, TX 路 Member since 2017 路 814 posts 路 466 votes
    4y

    Have you ever kicked out some family members from your own personal property while visiting/staying few nights or short term (couple months)?  I have, and I love them, and I enjoy their company, but...  The problem is when they abuse the trust and then becomes something else.  

    Now imagine handing out a portion (or a big chunk) of your business to a family member with little control unless you have an extremely good relationship and you would not care to carry on the burden if they can't fulfil the terms.  

    How could you evict them if they do stupid things and still keep a good relationship with that family member and the other family members that take their side?

    1Reply
  • Eric Gerakos
    Investor 路 Costa Mesa, CA 路 Member since 2016 路 1k+ posts 路 1k+ votes
    4y

    Bad.

    1Reply
  • Joe SplitrockPro Member
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    Rental Property Investor 路 Sioux Falls, SD 路 Member since 2015 路 9k+ posts 路 18k+ votes
    4y

    @Champ Leong renting to family is a mistake. People you totally trust can completely disappoint you. Unfortunately with family, you assume they will respect you, because you are family. They are actually more likely to take advantage. "Come on, you know I am good for rent." is the type of thing you will hear. It is like an addict saying, "I swear this is the last time". They fully believe what they are saying. 

    The best policy is to say, "I never rent to family and friends". When asked why, the answer is "I value our relationship too much to let business get in the way." If you do rent to family or friends, be prepared to loose money or lose the relationship. Decide which is more important going into the situation. Unfortunately when you lose money, it usually leads to also loosing the relationship.

    My sister lent my other sister $500 ten years ago. Every time she brings it up, the answer is the same. "I will pay you back, we just had some unexpected expenses this month." My sister never asked to borrow money from me, because she knows the answer would be no. I may give her money, but never with the expectation of repayment. Charity is different than business.

    2Reply
  • JJ P.
    Real Estate Agent 路 San DIego 路 Member since 2019 路 177 posts 路 185 votes
    4y
    Originally posted by @Russell Brazil:

    Never rent to family or friends

    My motto has been for years:  When you loan money to friends, you lose the friend and the money.  Don't do it!  

    2Reply
  • Matthew CrivelliBusiness Member
    Lender 路 MA 路 Member since 2021 路 1k+ posts 路 1k+ votes
    4y

    Anytime you mix family and business you open yourself up to issues and relationship problems. I see realtors complain that a family member took a pass on them when it came time to sell their house and get all upset. I never understood this, I do everything I can to stay away from dealing with family because I love them and don't want to strain relationships over money! It's all fun and games until something goes wrong and one or both parties feel like the other side is an a** hole lol. 

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  • Loried Fav
    Member since 2021 路 1 post 路 0 votes
    4y

    Never rent to family or friends 馃ぃ

    0Reply
  • Matt Greer
    Real Estate Agent 路 Mesa, AZ 路 Member since 2017 路 231 posts 路 169 votes
    4y

    I wouldn't unless you know for a fact they'll pay and won't cause damage. If something goes south you'll either have to eat it or take a a family member to court. Sounds like a nightmare. I also know of people who rent to family as a charitable sort of act to help them out if they're struggling, and that can be good as long as you know what you're getting yourself into beforehand.

    0Reply
  • Matt M.
    Specialist 路 Easton, PA 路 Member since 2018 路 1k+ posts 路 2k+ votes
    4y

    @Champ Leong

    If you had to ask the question, you already know the answer.

    No!

    1Reply
  • David C.
    Accountant 路 NC 路 Member since 2017 路 64 posts 路 26 votes
    4y

    @Champ Leong this is generally very difficult because of maintaining the business side. I am actually currently renting to family members at fair market value. They have chosen to auto pay their rent biweekly as they are paid to prevent any issues. This has worked and has been the case for about 2 or 3 years.

    0Reply
  • Bud Gaffney
    Rental Property Investor 路 Boston, MA 路 Member since 2019 路 2k+ posts 路 1k+ votes
    4y

    @Champ Leong do not rent to family.

    0Reply
  • Bud Gaffney
    Rental Property Investor 路 Boston, MA 路 Member since 2019 路 2k+ posts 路 1k+ votes
    4y

    @Champ Leong never ever ever ever mix business and family.

    1Reply
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