Renting to friends and family is often a complicated situation, with many seasoned landlords advising against it. If all goes right, you’ll end up with a good tenant who you can rely on to consistently pay the rent on time and in full. If all goes wrong, it can sour your relationship with the friend or family member in question, and brings with it a whole host of other potential complications. When looking to rent to family members and friends, it’s important to understand that complications can and likely will arise. Doing so will allow you to create a plan of action so that you can resolve issues quickly and effectively, maintaining your personal and professional relationships.
Assess the potential risks and rewards
Before making any sort of commitment to renting to your friends or family members, you must first assess the risks and rewards of doing so in order to make an educated decision. Are you prepared to take on the complications that can arise by hosting your friends and family as tenants? Are you willing to potentially sour your relationship with these people in the event that things go south? Are they known to be reliable? Does their lifestyle match the expectations you hold as a landlord? All of these things absolutely need to be considered before making putting pen to paper. If you jump into a long-term agreement with somebody you love and respect, you need to be prepared for the benefits and risks associated.
Sign a rental agreement and discuss the terms openly
Treating the rental agreement the same way you would with a complete stranger is crucial to the success of your landlord-tenant relationship. Your agreement should contain the same content as any other rental agreement you’ve issued to a tenant – this will help you to establish your expectations, and will lay out common rules associated with who will be responsible for paying for utilities, and how you expect them to behave in terms of damages, unauthorized guests, quiet hours, subletting, and smoking. Most importantly, signing a rental agreement will also allow you to lay out your expectations in terms of paying rent and required deposits, and what will happen if they fail to pay on time.
Keep your personal and professional relationship separate
Before signing anything, sit down with your family member or friend and make it clear that your renting to them will strictly be a business relationship. This means making it clear that you won’t stand for late or missed payments, damages, causing disturbances to other tenants or neighbours, or any other bad tenant behaviour. Making these things clear from the get go will help you differentiate between your personal and professional relationships with this person, and will make it clear to them that you aren’t going to be extra lenient just because you have a relationship.
Plan for the worst case scenario in the event that things go awry
While landlord-tenant relationships with friends and family members have been successful in the past, they’ve also resulted in disaster for other landlords. There’s always a chance that things will turn sour on a moment’s notice, making it important that you know how to cope with that situation should it occur. Develop a plan that will allow you to terminate your agreement if things go south – it will save you a great deal of time, energy, and grief if that day comes.
The safest way to rent to your friends and family members is to enlist the services of a professional Toronto property management company. Highgate has an experienced team of property managers that take care of day-to-day landlord duties including maintenance, rent collection, and conflict resolution, freeing you up to take care of the more important things in your life. For more information about the property management and realty services offered by the experienced team at Highgate Properties, contact us today.