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Self Manage Tip #1 – Should I Rent to Friends and Family

This is a very personal question.  So let's go through the different scenarios to help narrow things down a bit.

To start with, the simple answer is that it is NOT advised.  So be prepared to tell them no upfront, and why.  The why is is that you shouldn't mix family & business, and you value your relationship more than anything you might make off them in rent.

If you do go forward, be prepared to treat them like any other tenant. This would include running a credit report, getting proof of income, etc.  Knowing someone as a family member is different than someone in a business sense, that it to say someone that owes you money.

Checking their credit is important. If they owe money all over town, are they going to pay you when other creditors come calling?  They may play the 'we just need a little help' card, and after all, you are their favorite relative...

Make sure the lease is a professionally prepared document that spells out everything that a normal lease would contain.

Make sure to collect a security deposit, a full months rent and have a signed lease in hand BEFORE letting them move in. Once they move in, they have rights, even if they didn't pay you a dime or sign a lease. So be very diligent here.

Be prepared if they ask you to 'hold the house for them' until they're ready to move.  Most managers will only hold a home for 14 days AFTER having a signed lease and deposit in hand.  And it's really not holding the home, the lease just starts in 14 days.  The lease is valid, and rent has been collected.

Security Deposits can NOT be used as last months rent.  So don't fall into this, it is actually against the Texas Property Code to use the deposit as last months rent, and if the tenant tries to do so, it is considered bad faith and they can be held for damages, but that is it's own article...

If you need a second opinion, we are here to help.  Always feel free to Contact Us if you need help or have a question.