By Andrew Trim
Author of Real Estate Dangers
Renting your investment property out to family or friends can sound like an ideal situation, however it can quickly turn into a problematic tenancy. What may seem sensible to begin with, renting to family and friends can cause problems if the right measures are not implemented.
Tenants who are overly close with their landlords will sometimes take advantage of the situation, even if it is unintentional. Whether it’s delayed rent payments or a below market value rent, friends and family members will generally feel more comfortable and may not treat your rental agreement seriously. It can be particularly difficult to confront family and friends if they refuse to pay their rent or cause damage to the property.
The lack of professional property management is one of the biggest driving factors why such mishaps occur. If you are set on the idea of renting out your investment property to a family member or friend, don’t overlook the importance of having a property management team in place. A property management team will act as a buffer between you and your tenants should anything go wrong. They will also do a background check, conduct inspections and make sure a legal agreement is in place. Looking after your property is their main priority, therefore they will often step in before an unsavoury situation takes a turn for the worst.
If you do choose to rent to family or friends, it’s important to remember that despite having an existing relationship, business is still business at the end of the day. Many friendships and family relations have turned sour as a result of rental agreements gone wrong, which is why it is important to understand the risk involved.
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