Newbie Question #8: Having tenants before a property

[Elisha Keller]

So, as many of you know I have about 3-6 months before I'm ready to purchase a unit; however, I know I will be very stressed finding a place, buying the home, fixing what needs fixing and THEN I'll have to find tenants. My boyfriend and I know a few people that will be looking for places to rent in that time. Here comes the newbie question of the day:

Is finding tenants before you have a property a good idea? Some of the folks are people we know very well, we may also take applications from "friends of friends" type thing right now. Would it be smarter to wait until we have everything ready and then go through the process of finding someone? We really want to reduce our vacancy rate (and I definitely don't want to start off with a month or more of empty units).

[Bill S.]

Big no vote for renting to friends. Ok so what do you do when one of your "friends" comes down with cancer, can't work and doesn't get disability because they are too wiped to go through the process. Do you evict? If so you will lose ALL your friends for being a cold heartless LL. Not really worth it. You maybe able to draw the line but I doubt your friends can do the same.

When your friends think of you as a LL they think friend first then LL. Tough to make that transition to LL first. Once you do that you no longer have friends. Friend thinks what's a few days late on rent so why does my "friend" charge me a late fee. There are endless scenarios.

Best case everything works out according to plan. Worst case you are starting over with friends.

The soonest I would start showing a place is when it is rent ready. I know it means some holding costs on the front end but you will have lots of brain damage with little progress. Tenants and most people have NO imagination about what a place will look like. I have tried this a number of times and met with a colossal waste of time. I've had people come back and say "wow that's nice" but they don't rent because they remember what it looked like. Want to get a rap as a "slumlord" from your friends then show them your places before you fix them up.