The Pros and Cons of Renting Your Home to a Friend or Relative
For whatever reason: sabbatical, extended vacation, or short-term transfer, you’ve discovered that you’ll need to rent out your home for a few months, or perhaps longer. As opposed to the alternative of advertising your rental in the traditional classifieds and being besieged by strangers, the idea of offering your place to a friend or relative is certainly much more appealing. The issue of conducting background checks and looking into references becomes a moot point, along with concerns about trying to figure out who these people really are. However, as Zillow contributor Jennifer Riner recently pointed out, it may not always be what it’s cracked up to be. For her story, which was posted on Zillow’s blog, Riner interviewed real people who’ve had direct experience with this scenario.
Two folks, Mario Bonifacio and Manshu Verma, reported that things went well when they rented their properties to friends and relatives. They even hinted that renting to tenants they had close relationships with was very positive and eliminated the need for a property manager. Contracting the services of a property manager is of course an added expense.
See related post, “Pros and Cons of Hiring a Property Manager.”
Verma explained, “The relative took good care of the house and told me of repairs needed, which I worked with him to get done, and then also gave me enough notice of when the lease would expire and need renewing, and when he was finally going to vacate.”
One of the main risks involved with this type of set-up is how it may affect the relationship between the parties. When assuming the new roles of either landlord or tenant, there are definitely a few new dynamics that come into play. It could cause the individuals to see one another in a different, and not always favorable light.
When deciding to rent to or from a family member, carefully weigh the pros and cons of your position. Would your privacy, free time or personal space become compromised? Likewise, for those who are considering renting from a relative, the same drawbacks could hinder the deal. If you rent Aunt Martha’s guesthouse, will she make a nuisance of herself with unannounced visits and unwanted, although still warm from the oven casseroles?
Friends who rent from friends could upset their established and equal planes of existence when one is placed in what’s perceived to be a higher spot on the totem pole. Your old college roommate, aka your new landlord, could become a little power crazy and demanding, which would alienate most anyone. Tensions may also rise when rent increases or fails to be paid on time. Both parties could see that their friend or relative is sloppy or does not stay on top of things, such as routine cleaning in the case of a tenant or ongoing maintenance in the case of a landlord.
One key to success in such situations is to have expectations from both the landlord and the tenant clearly defined. That will definitely reduce the prospect of any friction. Things to consider are: when the rent is due, pet, smoking, noise and guest policies, plus the landlord’s responsibilities and accepted time frame for fulfilling them. The bottom line is this: run the arrangement like a business!
In addition to securing a stable tenant, and improving cash flow, renting to friends and family members can be a win-win situation in other respects as well. Depending on the closeness of the relationship, geographic proximity and other circumstances, sharing activities such as meals, car-pooling, home improvement and maintenance tasks could also sweeten the deal.
Subscribe To Our Newsletter
Sign up with your email address to receive news and updates.