The Pros and Cons of Turning Your Friends into Tenants
Most landlords keep their distance from their tenants, and with good reason. It’s not because the landlord doesn’t like their tenants, but because being friends with a tenant can turn out to be a bad idea. When does a tenant become a friend? And at what point do you treat them differently?
Sometimes tenants might be cool to hang out with and get to know. Unfortunately, no matter how well you connect with a tenant, if you don’t maintain boundaries, you can get taken advantage of.
Becoming Friends with Your Tenant
Building a friendly relationship with your tenant can be easy, but it’s essential to navigate this territory with caution. Blurring this line can lead to complications and expectations.
You can still be friendly to tenants, without being friends:
- Be approachable. It’s good to be welcoming to your tenants so they feel comfortable approaching you with any problems or issues they might run into.
- Be respectful. Even if you have no intention of being friends, as long as you are respectful, your tenant should be respectful to you as well.
As a landlord, you have a responsibility to maintain a professional relationship and ensure that both parties adhere to their respective roles and responsibilities.
Renting to an Existing Friend
If your friend is asking for a favour and wants to rent out your property, chances are that trouble is already coming. Having pre-existing rapport might be useful for trust and communication, but your friend will definitely bring up your history together.
Some landlords can successfully strike a balance between friendship and business, but it’s important to weigh the potential downsides. Situations happen where a tenant takes advantage of the friendship, whether by pushing the boundaries of the tenancy agreement or expecting special treatment. These situations can strain the landlord-tenant relationship and even lead to legal complications.
Pros of Renting to Friends
The pros of renting to a friend depends on the friend, and who they are as a person. They might be trustworthy, with a stable source of income, and a neat freak who will keep the place tidy. Planning to rent to someone like that will achieve your objectives to generate a consistent stream of rental income. Their good character would also be ideal for a tenant.
You can depend on them to pay the rent on time.
Assuming you spend time regularly with this friend, you’d be aware of their spending habits, access to money or when they get their pay. It gives you reassurance that rent will be paid on time and you get a glimpse of their financial situation, which you might be able to help with from time to time.
They will take care of your property.
You can trust your friends to take care of your property. They might be less likely to bother you about some minor problems than they would a regular landlord. For example: if you have to replace a broken door knob from a previous tenant, your friend would be okay to wait for a new one. A regular landlord wouldn’t have that much understanding and would need to fix the issue as soon as possible.
They would be willing to follow the rules.
This relies on the fact that your friend wouldn’t want to inconvenience you and respects you to follow the rules of the agreement. This might include rules on visitors and how long they can stay, types of decorations, or noise levels after hours. And if they break any, you can be in a good position to remind them. They may even be less intimidated to ask for permission and notify you when necessary.
You can check in on the property more often.
Most tenants aren’t too keen on letting the landlord come see the unit on a regular basis. Though exceptions to the case are asking for rent or managing repairs. Having friends as your tenants means that you would be welcomed at the unit, and you can inspect the place on your visits.
It’s easier to agree and avoid conflict.
Good friends can deal with situations pretty calmly, or at least, come to an agreement. Big changes in tenancy situations can be stressful for both tenants and landlords. Situations like:
- Moving in or moving out
- Discussing repairs and damages
- Negotiating new rent price
Any tension that comes with those changes can be dissipated and become easier to deal with. As long as you can talk it out, then you can surely agree on a solution.
Cons of Renting to Friends
Most people would know their friends and family members would make terrible tenants. Your personal relationship with them would get in the way of the landlord-tenant relationship. And eventually, it would negatively affect both!
You’re a friend, not a landlord.
When your tenant sees you as a friend, of course that would assume that you’ll be forgiving and much more lenient than if it were a total stranger. This may lead to late payments and contract violations. If you let your tenant off once, what’s stopping them from doing it again and again? It’s harder to draw the line when they’ve already broken the rules.
It’s difficult to discipline a friend in the same way as a random renter. No matter how you go about enforcing the rules, a tenant who is also a friend will feel slighted when asked to change their behaviour. Tell them their actions have consequences and they have to follow the rules like everyone else, they may take it the wrong way. After all, letting things slide is an unspoken agreement between friends and one you might be pressured to do.
They would ask for special treatment.
Some tenants would want to reap the benefits of being friends with the owner. This might include:
- Waived late fees
- No rent increases
- Cheaper rent overall
- Front row parking or free parking
- No credit or background check
- Utilities included in the rent
- Permission to have a pet when you otherwise don’t allow pets
- A waived security deposits or no security deposit deductions
- Protection from eviction after breaking the lease
To the landlord, all these rules are in place for good reason. If you don’t charge late fees, your tenant will walk all over you and may never pay rent on time. If you don’t increase the rent, you’ll lose income on what was intended to be an income-generating asset. These perks will be a gateway to the tenant asking for more.
Having an agent as your go-between.
Unless you’re renting to a friend to bypass the agent entirely, they tend to stick around after a unit has been rented out. They help communicate with tenants and take care of most rent-related issues. But your tenant friend would see you as the higher authority, so why would they go through the agent if they can just talk to you? If you’re the type of landlord who relies on your agent, this might be an inconvenient issue, or something you just aren’t equipped to deal with.
Resentment over money matters.
When money is involved in a relationship, there can be tension, and this applies to landlord-tenant relationships too. The tenant’s money is directly tied to their home, so any problems in the relationship can make them feel threatened.
When tenants feel their home is in danger, they can start to hold grudges. They may not express their concerns right away, but eventually, things can turn ugly.
As resentment builds up over time, tenants may act poorly, like paying rent late just to annoy you, or they might even stop paying rent completely.
You Might Lose a Friend Over Broken Trust
In the long run, allowing them to move in can end up costing you and your ROI more than necessary. Loss of rental income is the biggest risk to take with your property.
Not to mention, all the drawbacks of renting to someone you know could have a negative and long-term effect on your friendship. Having to choose between your business and your relationship with that person is a stressful and complicated situation. If your friend thinks you treated them unfairly or you feel disrespected or let down by somebody you trusted, the relationship could eventually become irreparable.
Many landlord-tenant issues are petty arguments. It would be horrible to lose a real friend over something petty like asking your tenant not to leave garbage outside their apartment door even for a few hours.
While it might not be all bad to rent your property to a friend, there are definite disadvantages in many cases. It is essential to carefully consider the decision to rent to somebody you know and only do it if you do not have a more qualified candidate ready to apply.
A Word of Advice
Even though things can go wrong, renting to friends is not always a terrible idea. In fact, it can be a win-win idea if done correctly. We’re glad friendliness is something you can find between landlords and tenants, but based on our experience, here’s some steps you can take as precautions:
Follow the Same Procedures as With Any Other Tenant
Remind your friends that they must follow the same rules as all other renters. They must follow everything outlined in the agreement, pay their rent on time, and submit maintenance requests through the proper channels. Enforcing the rules keeps the relationship professional and helps landlords maintain their authority.
Make Sure They Sign the Tenancy Agreement
Friends must sign the same tenancy agreement you would use for any prospective tenant. Include the same terms you would for any resident, like the rent amount, due date, tenant responsibilities, and your obligations as a landlord. Communicate with your friend/tenant as you would any other renter. They need to know what is expected of them and what they can expect from you.
Perform the Tenant Screening
Of course, we always recommend tenant screening. Even if you knew your friends since primary school, you probably don’t know their bank account balance, how much money they make, or if they’re drowning in debt.
Make sure they can pass your tenant screening process with a background check, income verification, and credit requirements. You also talk with prior landlords and check references before allowing anyone to sign a lease and move in.
Read more: Tenant Screening Made Easy – No, Seriously
