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Renting to close friends might sound like a good plan to get tenants fast, but later on, you will wish that you hadn't done it in the first place.
A friend of mine named Mia knew the possible drawbacks of renting to people she knew. However, she agreed to rent to a coworker who was kind to her and needed help. Three months later, Mia expressed her disappointment because her coworker seemed to be taking advantage of many things and felt entitled as a renter.
When you're running a rental property business, the last thing you want is to damage your relationships. So the answer is yes, you should never rent to close friends. Friendships and business don't go well.
To help you understand why it isn't a good idea, here are five reasons:
Tenant screening is the most essential thing that a landlord does to determine if someone is the right candidate. It weeds out bad tenants who cause disturbances, fail to pay the rent, and don't abide by your rules. Landlords who rent to close friends usually cut corners and find themselves facing issues (for example, property damage) with no one to hold accountable.
Your friends might not even be aware of it, but they can be taking advantage of the situation in different ways. One example is when they pay the rent a few days late and think that late payments aren't a big deal because both of you know each other, right?
If your rental property sustains damage for whatever reason, would you be confident enough to withhold the security deposit from your close friend? Most likely not. Security deposit conflicts are common between landlords and tenants, and you wouldn't want your relationship with a friend to go sour.
Your friend might feel indebted to you and because of that, the person can be uncomfortable with reporting any damage to the rental that resulted from his or her negligence. Failure to report structural damage can lead to costly repairs down the road. As you can see, this situation will be impacting your finances.
There will come a time when you'd decide to evict your close friend because he or she failed to keep the property in a clean and habitable condition, missed several rent payments, and caused excessive noise multiple times. It's going to be tough for you because while you care for your friend's well-being, you also know that continuing the landlord-tenant relationship will ruin your financial portfolio.
Ultimately, the choice to rent to close friends is up to you as the landlord. Hopefully, you get to ponder over the points I shared above.
Renting to close friends has more disadvantages than advantages. If you find it difficult to say NO, do this: Tell your friend that you love to help them in their situation, but you have a policy about not renting to friends. However, let them know that you'd be more than willing to help them find a good place to stay!
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