Would you rent your property to friends or family?

Question

Hypothetically, if you own a rental property, would you rent it to friends or family? This was a very interesting discussion in one of our BiggerPockets facebook pages recently so I'm curious what you all have to say.

I've personally had a positive or at least neutral experience with this but my opinion is it really matters if you're renting to this friend/family member because they need you to rent to them because of some kind of life circumstance or maybe they're not qualifying for another rental versus are you renting to them simply because it would work well for both of you.

If it just works well for both of you given the timeline, location of the rental or whatever then why not? Just treat them like every other tenant, lease, security deposit, etc.

If it is because they need a rental for some life circumstance my personal litmus test would be - would I allow this person to move into my personal residence with me for the period of time they want to live in my rental? If the answer is no then I also wouldn't rent to them in one of my rental

What do you think? Would you rent to friends or family? What things would you consider if you were making this decision?

Greg Scott · Answer

Want to see the end-game?

I spoke to a guy recently who was trying to figure out how to make it to retirement. He had a quad in California about 1 block from the beach. The property is worth a mint. He had owned it for 30 years and should have been making bank on cashflow.  He wasn't.

He had one sister (disabled) who was living in one unit for about 25% of typical rent.  He had another sister living there at about 50% typical rent, and one cousin that was also paying about 50% typical rent.  The fourth resident was unrelated, but a long-time resident not paying market rates. The rent increases over the year hadn't kept up with inflation so he was roughly zero cashflow after taxes, insurance, and maintenance.

He didn't feel he could sell, because family was living there and did not want to raise his rent either.  Emotionally and financially, he was stuck.

Ying Tang · Answer

For me, it's depending on the person. If it's someone close enough that I don't care about making money, then yes. Otherwise, it's not good business to involve friends and family.

Alan Asriants · Answer

Personally I would steer very clear and with caution renting to friends and family. That being said I think that everyone is different. There are family members that I would be completely ok with becasue i know those people at their core. This goes far beyond background check, application etc. These are people you have built an incredibly strong relationship with and have been through a lot with that you know will never create any issues over rent. That being said, I wouldn't charge that person top dollar and honestly would do it more as a temporary favor. My Dad rents to his sister and mom for a while and there are no issues. Its pretty normal. However if I have even the slightest doubt I wont consider it. One small argument can ruin a relationship.

Jared Martz · Answer

My opinion will always be a no for friends/family. Too many potential negatives being brought into your business. Best to keep renting to tenants that you have no relationship with. Minimizing risk with rental properties should be your main focus.

Tyler Palmer · Answer

Don't do it. It's not a great decision from a business standpoint. You will more than likely destroy the relationships you have with that family member/friend.

You'd be surprised what could happen...

Joe S. · Answer

Usually the answer is NO….

Kate Sanchez · Answer

@Rene Hosman Personally, I say no mixing family or friends with rentals can blur business lines, and I’d rather preserve the relationship than risk conflicts over leases or payments.

Brian McMurry · Answer

Yes I would under some circumstances. For example, as an alternative to renting someone else's apartment for a child in college or to bring an aging parent closer. See my post: Closing Today on a "Reverse Kiddie Condo"

David M. · Answer

No way I would rent to friends or family.  I have done that and it has gone badly.  Even friends/business associates recommending tenants can be problematic.  Whenever it goes bad, the person recommending the deadbeat always "...had NO IDEA they were a deadbeat!?!".  Then, the person recommending them loses credibility as well.

Greg Parker · Answer

Working out well for me.  You just have to have ground rules.  Depends on your personality.  If you are a pushover, it will not work out well.  If they know you will kick their butts to the curve and call grandma if they don't act right, it works.

In my personal rentals, I have, brother-n-law in one, nephew in one, employee in one, friend in one. All at way lower than market rent rate.  My other tenant is an elderly lady with a pet turtle.

You have to help friends and family.  You may need them some day.  And, they all know my wife will personally go throw them out on the street at a moments notice.  No lease required on these, they have the fear of Natalie that helps them make good decisions...lol

Would you rent your property to friends or family?

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