We often get caught up in the thrill of buying an investment property and forget about the key components connected with being a property investor. Finding suitable renters is one such crucial component. When you acquire an investment property, you want/need to fill it with the correct type of tenants: individuals who are trustworthy, employed, and searching for long-term housing.
There are advantages and disadvantages to having friends as renters. It’s common knowledge that mixing work and pleasure is a terrible idea, and this may, to some level, extend to renting out your house to friends. If you own a rental property and need a tenant, you may be tempted to have relatives or friends sign a lease agreement. But, before you do, evaluate the advantages and disadvantages of this real estate investment.
Benefits of renting to friends
Renting to friends can help you reach your aim of securing a consistent stream of rental revenue as a landlord. If you get into a lease arrangement with friends, they are more likely than a random renter to maintain their half of the deal by paying rent on time and in full. Furthermore, friends are more likely to respect your home than random tenants. And they will most likely be more accommodating in terms of things like granting you access to the house or apartment in issue.
Risks of renting to friends
Renting to friends, on the other hand, is a risky choice. For example, because of your friendship, a buddy may take certain liberties, such as routinely being late with rent payments. This, in turn, may disrupt your financial flow. Furthermore, while you would expect a friend to take better care of your property than a random tenant or roommate, this may not be the case. And if that happens, you may find it more difficult to withhold your friend’s security deposit.
And let’s not forget that the leasing arrangement has the ability to derail an otherwise excellent relationship. If you have a tenant who is late paying rent, is disrespectful to your property management, and breaches specific lease conditions (for example, by being noisy during specified quiet hours in your building), you should have no trouble putting that renter in his or her place.
However, if you’re renting to pals and need to enforce particular regulations, things might get complicated. Friends may be angered if they are not granted additional time to pay their rent or are not given preferential treatment in accordance with building regulations. Alternatively, you may feel angry that your pals are taking such liberties. As a result, A friendship that is no longer.
Finally, as renters, your pals may overstep their bounds while you’re the landlord. Assume one of your friends’ showers stops draining, leaving it inoperable. The last thing you want is for your pals to feel comfortable contacting you at 2 a.m. to go over and fix it when it would normally have to wait until morning under a normal renting agreement.