I'm about to rent a house to a friend of mine and while I don't have an apprehensions about it (or rather him). I know the practice is fraught with issues and ruined friendships. I'll document everything per my usual process, but any other advice would be appreciated? Any horror stories that I could learn from?
Don't do it.
A true friend will understand.
It's a business not a hobby not a charity.
@Mills Snell ....if you follow your rental agreement to the letter from day one, you should have no issues. As Max above stated, It's a business.
Keep emotions out of your decisions...one day late means one day late. treat him like any other tenant.
I have learned when it comes to lending money, don't lend more money than you are willing to lose. I think the same is true with renting to a friend. If you have to choose between getting your rent or helping your friend which would you choose? So, you want to hear horror stories? We are currently renting to an aunt who is 70 years old and her rent is only $400 and she hasn't paid in over a year. Luckily, we own the home free and clear and are willing to help her for FREE! Just know that if you rent to friends or family it may no longer be a business it might become a non-profit or a social service. Good Luck!
Have a great lease and put EVERYTHING in writing! The key is this is a business and no one cares more than you do.
i will never rent to friends, but if you do be sure to explain to your friend this is a biz
good luck @Mills Snell
Thanks all, that's a good perspective to focus on as I consider the decision.
@Mills Snell -- Josh here from Atlanta. I'm pretty new to real estate investing. Someone much wiser and more experienced than me recently steered me away from a similar situation. He helped me understand that tenant relationships are complicated enough, without the added intricacies of friendship history. The nuances of friends-as-tenants will make it difficult to enforce your business policies, even if everything is clearly contracted.
One trick was knowing what to say -- how do you even reject a friend's request to rent without messing up the friendship? I found myself wishing my friend never asked in the first place!
This mentor suggested using the line, "I value our friendship way too much, and I can't run the risk of business getting in its way." It's not perfect, but I like the approach of placing the value of the friendship above the business agreement.
You're asking for advice for something you were already advised not to do? All I can say is good luck. It doesn't always turn out to be a nightmare but you just need to be prepared to put a friend out on the street if need be.
Agree on how it is to be handled in advance!
Eviction notice on first day your rent is missed or third day?
Heed the warning bells in your head. I like the advice to say the friendship is too valued to let the possibility of business getting in the way.
I'd probably say, "You don't want to rent from me. I'm a real beotch landlord. You don't want to see that side of me." :-)
Sue, you are hilarious. That would be a good line. lol ;-)
Never do business with family or friends. In your case, you are risking losing a friend, but you maybe alright with that.
I say find another tenant.
Havinga five day grace period for the rent, creates a healthy relation with a good tenant. Usually from the first to the fifth with a $25-50late fee, charged if not truly out of control, as long as not excessive. A good tenant wants and need stability. A good tenant, pets or not, cares about their home as want and need stability. Its very easy to tell a good tenant, for they want stability, and demonstrate that in their daily life in all ways.
Does your friend demonstrate he she values stability, or is he she the type to flight and move around in homes, job, relations, etc. Does he she balance their money, put rent and utilities as top priority;or clothes, dating, expensive rrstaurants, socializing etc. As a friend, you pretty much have more inside data.
Knowing this, only you can decide. You will either have the dream tenant, or a huge nightmare. No good tenant wants to move. Thats months of sesrching, dtiving, moving, packing, instability.
Best tenants want and need stability. Best tenants look for landlords that allow stability, want it, and let tenant pay bills and live at ease, in privacy. Best landlords have fair contracts, which allow the five day pay rent period, as in real life, paychecks and social security do not usually comebon the first, but betwen the first thru the fifth.
The main reasons a good tenant will move, are for these reasons.
1.Unsafe dwelling or too unsanitary.
2.Invasive landlord, and landlord not fix issues.
3.Relocating for work, marriage, divorce, or need a bigger or smaller place.
You can find good tenants, even not rich; if stability, responsible priorities are what they have as a need andbin their character. These types, do not want to move. Time and effort is valuable to them, and they must have order and efficiency in their lives. Many times, landlords have problems with college students and unknown criminal types. For a student can be more unconcerned about stability and not value to upkeep a place. Yet, the student caring about grades, wants stability and order. The lazy, crime types, and even the domestic violent types, thrive on chaos, hence, not stable and nightmare tenants.
Of course, these are just examples, merely to demonstrate that as a friend, you have insight on whether your friendvis the stable type that cares of the condition where they reside. Stability is a dependable trait.
From a history of renting rooms and never will, again; I highly recommend your lease states that you do not have to ask for the rent. In the grace period, friend mustbpay, then send you a short text. Why? For if you are forced in the role to ask, you will resent, as its stressful, pressure, takes up YOUR time, and unfairly puts you in the work mode to approach. A good friend or tenant, never makes a landlord ask. All my years of renting, I paid, then texted, and even texted, tom I am paying rent at the bank. Good landlords appreciate that. Tells alot about a person, when ones have to ask for their money. Even if ones borrow money, gact of initiative to inform, even give small amts monthly as able, goes a long way to maintain trust and respect.
Hope this helps!
What do you like more , Money or friendship . Pick one not both .
Originally posted by @Matthew Paul :
What do you like more , Money or friendship . Pick one not both .
I've rented to a friend, and to friends of my business partner. When it was my friend I bought him lunch 4~5 days a week and he had dinner at my house almost as often since I wanted to make sure he could make rent.
I even hired him as a consultant on a job I had so that he could make 2 months rent once.
I'ts like going to the casino, don't bring any more money than you can afford to leave there. With the friend I mentioned above it was put him in an apartment that was vacant or put him in my spare bedroom and the apartment seemed much more convenient to me. I won't talk about renting to my business partner's friends here since that was a problem with the partnership agreement, not the friends...
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