A while ago – well maybe longer than a while ago – OK back when I bought my first investment property – I thought it would be a great idea to rent one of the units to a friend. He was down on his luck, recently divorced, needed a year to get back on his feet, had a good job and I’d known him for years – just an all-around good guy.
Just two months into the lease: police calls, trash/junk violation notices, damage to the unit and more. It was driving me nuts trying to figure out how to handle it! I know, anyone can do this – but it’s much harder to deal with a friend or relative when there are problems like this.
As with so many things, trying to make something business-related work with friends or family can backfire. Regardless of having a lease, friends and relatives might assume that you will give them a break and that “rules don’t apply to them”. They will do things thinking that it doesn't matter because they "know the landlord" In the end, friends and family expect your personal relationship to come first, and if you try and follow the rent-related matters, your personal relationship quickly becomes strained.
And if the rent related matter is “non-payment of rent” – that usually ends the relationship. Bottom line policy – don’t rent to family or friends.