I used to have a best friend whom I knew from the day I was born. We hit every milestone together—and so did our parents. When we were both looking for a place to rent at the same time, it seemed like a no-brainer. Who else would make a better roommate than my best friend?!
It was quite possibly the worst mistake I have ever made. Within a month, our friendship was damaged. She didn’t like my cat. I didn’t like her make-up mess. We bickered, we fought, and we never recovered.
So, when I read all of the real estate blogs (including this one) about NEVER renting to family or friends, it resonated with me. I knew there was truth behind the warning, and I swore that I wouldn’t do it.
All of that changed when I jumped neck-deep into a triplex rehab. Suddenly, I found myself reevaluating my options—reweighing the pros and cons.
If I rented to a friend, then I could do the work while renting out the unit. I could start building cash flow to help fund repairs. The logic was persuasive.
In the end, we decided to rent to our friend at a discounted rate for one year, which still equals more than if we had held it vacant an additional month. He agreed to paint himself and to allow us free access to his property whenever we needed to fix something. Given that his unit needs the most work, this felt like a decent deal. I conceded; we signed a lease.
It’s now been over a month since we signed the lease, and I have to say, it’s not that bad.
PROS:
The tenant helped with the carport demolition
I have a tenant that I know, like and trust
I’m collecting rents earlier than expected
I don’t have to paint
CONS:
I have to work around stuff: furniture, appliances, dishes, etc.
I feel imposing, especially since he works 3rd shift
It seems like I always have friends over now
I’m more distracted when working
So far, the pros greatly outweigh the cons. We discovered a massive leak in the kitchen wall shortly after signing the lease, which meant that our tenant received brand new cabinets, sink and faucet. We were happy to have him as a tenant throughout the kitchen rehab, which proved to be messy and time consuming. It would have been an awful inconvenience for a new tenant. Plus, he’s happy to have a new kitchen.
I would do things a little differently though, like be more specific!
For example, I told my tenant that I would purchase the materials if he painted. That seemed fair. However, I failed to mention that I had envisioned white paint in all rooms. So, when he brought me the color swatches that he had picked up from Lowe’s, I felt compelled to go with his plan. Had he been an average tenant, I would have responded with a heartless “Sorry but I failed to mention…” Since he was a friend (and had been so great throughout the kitchen debacle), I coughed up the extra cash for the colors he wanted. I’m always looking for the silver lining though. Our tenant friend feels almost as much invested in our rehab as we do.
That has to be good news, right?
Has anyone else ever cautiously rented to friends or family? I would love to hear your thoughts, especially since my grandparents are getting older and inquiring about a one-bedroom.
I own a small, three bedroom, one and a half-bath house in Berclair. I originally bought it to live in, but the call of midtown was too much, so I rented it out and moved. My first tenant was a friend from high school. At the time I let her move in, she was living next to my parents and really needed to move, since the house she was renting was being sold. She was, like me, a single mother, and I was in a position to both rent out my property and help someone in a bind. Win-win?
Wrong. The first month, she paid the rent on time, in full. The next month, when the rent was about three days late, she asked me if she could pay half then, and then half mid-month when she was paid again. Against my better judgement, I said yes, thinking having half the rent was better than having none. Come mid-month, I finally got the second installment. The check bounced. I called my tenant and told her about the bounced check and she blithely replied “run it through again. It’s good now.”
The next month, the exact same scenario happened, except that it was the FIRST check that bounced, not the second. I started adding on late fees and bad check fees. The mid-month check was then five days late. I was preparing to have a come-to-Jesus meeting, when she decided to store some boxes in the metal shed out back. Being an above-average sized person, she crashed through the floor to the ground below (about a foot). She threatened to sue me, and I paid her ER deductible, and asked her to move all of her belongings out of my shed. She refused. I threatened to sue her for the repair of the floor. Naturally, she refused. I ended up paying for her to move out before the lease was up. The day the movers arrived, she had not packed. A DAMN. THING. The movers called me and said she told them that since she wasn’t paying for the move, she didn’t care how long it took.
I went over and packed all of her belongings myself. We have not spoken in six years.
My next tenant was a former co-worker who really needed a place to move quickly. We agreed on a lease, boundaries, payment arrangements, everything. She wanted to paint, and we agreed on colors. A couple of months into the lease, the vintage central AC went out. I had a new unit installed within five days, which she complained about. It was April, and warmish, but not deadly hot. The house has ceiling fans in every room and an attic fan that could lift the Hindenburg. A few days later, the new unit quit working. I called the AC company who went out and checked the installation. Nothing was wrong. Couldn’t find a problem until they went out back and found her DOG had chewed through the coolant line on the brand-new AC unit. It was repaired at an expense to me, which I passed along to my tenant. She refused to pay for the damage, and wanted to take days off the rent for the time it took to install the new unit. It took some lett-writing to straighten this matter out.
Two months later, she got engaged. Then, she decided that she would buy a house, despite having eight months left on her lease. I pointed out that we had a legal contract obligating her to complete her lease. She countered with the opinion that doing what was in her financial best interest (buying a house to take advantage of the new administration tax breaks) was more important than honoring her legal obligation. We back-and-forthed for a while, and I ended up giving her 48 hours to vacate.
I would rather have my house empty than ever rent to a friend again. After I cleaned up all of the dog hair (from INSIDE THE REFRIGERATOR!) and repaired the damage from this tenant, I rented to a nice, immigrant family who has been there ever since, paying the rent on time. There has been normal wear and tear on the house, but nothing crazy like when I rented to “friends.” I would never, ever rent to a friend again.
Susan,
Sorry you had to go through all of that! Thanks for taking the time to share your saga. Hopefully people will follow your advice.
Kevin
Hey, Susan! Thanks for sharing your story! I’ve heard so many horror stories, but it doesn’t make emotional decisions any easier. I guess the best thing to do is keep emotional influences outside of business decisions 🙂
Also, allow me to offer you a tardy welcome back to midtown. I know you are also on Nextdoor, which is such an asset to community-minded folks like ourselves. I look forward to connecting with you again soon, perhaps offline even. Thanks for the comment!