Renting to friends - What's your take?

Question

Hello, my wife and I are moving at the end of the year and plan to rent our current primary residence (SFH 3bd 2ba) it will be our first rental. One of my wife's friends who knows we're moving and planning to rent reached out that she and her fiancé were interested in renting our house. What has been everyone's experience with renting to friends?

I was a little hesitant to rent to friends as I would prefer to keep business and family/friends separate, but to give a little more context they have been friends for many years and do seem like they'd take care of the property, however you can never be 100% sure. Her friend is a hairdresser and the fiancé is just starting med-school. The one reason I am interested is that they're looking for a long term place as the fiancé will be in med-school for the next 4 - 8 years, so it would be nice to not have a ton of turnover. What's your thoughts?

Thanks in advance!

Paul De Luca · Answer

The potential upside is marginal compared to the potential downside in my opinion.

Nathan Gesner · Answer

1. Friends will expect a discount, so you may be losing money.

2. You'll have a hard time separating the friendship from the business. If you need to serve them notice for a lease violation, it will be hard. If they are late on rent, cracking down will be hard. When they ask you to replace the chain link fence with a 6-ft cedar privacy fence, it will be hard to say no.

3. When things go south, you'll lose money and you'll lose the friendship.

I've managed for hundreds of owners. Many of them have rented to friends and family. I don't have hard numbers, but I can tell you about 80% of those situations did not end well.

Joel Case · Answer

I think it comes down to are you willing to lose the friendship for a possible long-term tenant. I personally wouldn't want to risk it if they were a good friend.

Sebastian Hernandez · Answer

I feel like doing business with friend and family is always a tough subject.

Personally, if I have the trust and confidence in them, I would do it. However, make sure that you have a lease agreement in place and that they have the sufficient income. In other words, vet them, while they are friends this is still a business and it needs to be treated as such.

Just my two cents, good luck!

Joe S. · Answer

I rented to three different individuals that was connected to my church or a church connection. Two out of the three left owing me money. I counted it as a lesson learned and didn’t ask them for the money or harass them due to the nature of the connection. The last church goer that I was connected to that wanted to rent from me I told them that a property management company handles it. Which in my case is very true since all new rentals are being placed with a PM.

JD Martin · Answer

Don't do it unless you are either willing to eat a loss - perhaps significant - or are OK with ending the friendship.

I have a rule of not renting to friends or family and I have broken it consciously three times, once to my mother and twice to friends. In all 3 cases I was willing to eat a loss if necessary. With my mother, there was no issue whatsoever (come on now, she's my mother). With the friends, both times they cost us money and totally sucked as renters. In the first case, a friend of my wife's, the friendship ended for several years until they reconciled. In the second case, which was my own friends, their adult kids did some pretty decent damage to my house which they (my friends) did not offer to pay for or even cover the cleaning charges, and I very nearly had to evict them as squatters. In that case I wanted to preserve the friendship so I just ate the cost.

Don't do business with friends or family.

John Woodhouse · Answer

I own a duplex which I rent out the other side to one friend and in my side I rent out a bedroom to another friend and I'll tell you it's been a very mutually beneficial situation. I would say that what has made it work above all else is that they both gross over 100k a year, we all have the same political ideas, and we all are pretty mature about communication and keeping things pleasant.

If they have a solid income to expense ratio and emergency fund, I would say that it would probably be pretty safe to rent to them, but if you're considering renting to a broke friend with bad money habits just because they're a friend, then you're GOING to regret it.

Joe Villeneuve · Answer

I hope they aren't currently good friends.

Joe S. · Answer

That’s a super good way to lose good friends. It sounds so touching and sweet to have the opportunity of showing up at eviction Court and see your friend and your friend’s attorney throwing you under the bus. Sounds exciting , Warm, fuzzy, and Invigorating… Or not.

This question has been asked so many times it’s not even funny. In all reality only you can decide how you want to proceed. There are some times when it works and the time iit don’t work well it’s not pretty and it’s not sweet.

Mose Gebremeskel · Answer

More than likely you'll disappoint your friends at some point. If you're willing to take it that's fine. I think hiring a pm might be better to take care of that.

Renting to friends - What's your take?

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