Having a rental property is having a business, and you have to make decisions based on what’s best for that business. Renting to family members and friends can cause conflicts and require you to choose between your business and your relationships. A family member living in your property might require a little tough love, and that can be difficult.
Downfalls of Renting to Family
When you move family or friends into your rental property, you typically aren’t going to be able to maximize the return on your investment. That’s unfortunate, because the return you earn on this property determines whether you’re making money on it or losing money.
Screening and Rent Collection
Your screening process, which is necessary for finding a great tenant, will likely be ignored when you’re renting a place to family. It will also be hard for you to charge them a fair price. Instead of checking comparables to make the rental price a fair market value, you’ll probably accept whatever they can pay. This is not good business.
The Benefits of Property Management
We get a lot of phone calls from people who have rented to their brother or sister or a family friend and I always know what they’re going to ask. They need the situation fixed. Either rent isn’t being paid or the lease isn’t being properly followed and enforced. Sometimes, there’s not even a lease in place. In most cases, there are too many emotions involved, which a property manager can take out of the situation. Professional managers can handle these things better than you can because the relationship they will have with your tenant will be strictly business.
If you are renting a home to your family members, remember that you’re not providing charity. You’re running a business and you need to take care of your business responsibilities. If this is going to be too difficult for you, hire a property manager or do something else with the property.
When you’re not sure what to do with family or friends who may be living in your property and creating an uncomfortable situation, contact us at Terra Residential Services. We’d be happy to help you.