Thinking of renting one of your properties out to a friend or family member?
The benefits are obvious…
Helping out a friend or family member, already having a relationship with the person, and having a pretty good idea whether trust is a concern or not.
Still, that can spell trouble.
And the last thing anyone wants to do is ruin a relationship.
So here are some tips for renting to friends or family…
Charge Fair-Market Rent — To get the tax benefits of a rental property, it’s not recommended to let friends or family stay there for too heavy a discount. It’s required to prove that the rent being charged is “fair-market rent”. A good rule of thumb is to charge the same as if the tenants weren’t friends or family.
Set Clear Expectations — Reviewing and signing a thorough contract is important with any tenant… it’s even more important when renting to a friend or relative. This will help set clear expectations and if something goes wrong, there is a clear agreement in place.
Communicate — Make sure to communicate just like it would be necessary to with any new tenant. Don’t assume that people know all of the rules or guidelines because they’re family or friends. Be clear and thorough. Over communicate if necessary.
Know What You’re Getting Into — Renting to family or friends very regularly goes wrong. So know what you’re getting into and protect your investment and the relationship as much as possible by preparing for, and heading off, the worst.
Hope that helps!
At Homely, we buy homes as-is for a fair cash price. We can even close in as little as two weeks and we’ll pay all closing costs. Give us a call at (949) 289-9440 to get your fair cash offer!