When you rent to family members, you have a unique set of circumstances. Not only do you have a solid and customer, you also have a customer that might take advantage of you. This post will help you understand the nuances of renting to family members. Whether it is moving a person back into the childhood room, or renting your investment property to them, the same criteria apply.
If you have been a landlord for any length of time at all, you have had to get tenants. The marketing, showing and initializing that must be done for a new tenant is some of the most time intensive procedures in being a landlord. That is also why as a landlord you are the most vulnerable.
If you have followed my posts, you know you need to develop a tenant screening process, ahead of time, complete with acceptance criteria for any new renter. You know you need to have a company that can run a credit check for you. You need an income verification system, either calling the tenant’s employer, or verifying pay stubs. You need a way to look up a criminal background. And you should have a way to validate past landlords.
When you are thinking about renting to family members and friends, there are two main reasons that they would want to rent to you. One is that they want to do business with you. They trust you, they have confidence in you, and they know you are honest in your business dealings. They are spending money anyway; they want to give you the business rather than someone that they do not know. The devil you know is better than the devil you do not know.
Keeping money in the family, or in a close circle, has been a practice that has been around for since time began. Businesses create subsidiary companies so that they can spend money between business entities and keep the money in house. It is a natural thing that you should want to do, rent to family members.
But, odds are, the above is not the case. Your friends or family needing a place to rent have fallen on hard times. It may even be a more distant relative, the brother-in-law going through a divorce, the nephew that is getting out of jail, the daughter that is getting evicted, and the cousin that just lost their home. Those are the typical family members that wan to rent from you, and some typical excuses.
When you have rental property, you will get these calls from family and friends. You have a place that they can be accepted at, because you will understand the situation at hand. The big-box places do not want the relative, as the relative does not meet the low-risk tenant screening criteria that the big-box place has in place. And besides that, the big-box place needs a deposit, which your relative doesn’t have either. But you are an understanding landlord, so you are the go-to person.
The first thing you need to do when renting to family or friends is say no. It is then over with. Move on. Find a new renter. But you have a vacancy, and an understanding of business, so you proceed anyway. You tell them that family is family, and business is business. This is business. Everyone knows that you will treat the person exactly like anyone else, and they expect no special treatments. You all verbally agree, and maybe even sign a lease, and shake hands. All will be well you both think; you give each other a hug, and say “Welcome Aboard!”
The family member moves in, with no deposit, and things go downhill from there. You soon start to realize, there is a reason for the person’s downhill slide and the need to live in your apartment. They have the money to spend on a new TV, but rent is a bit short this month. They have enough to buy cigarettes, and despite a no smoking policy in your units, they smoke in it anyway. And the pets that they were supposed to give away are all of a sudden moving into your place. You agreed to give them a helping hand, but said the four dogs could not move in. You are providing housing, not running a pet shelter.
So now, you have the choice. You can evict, and be the pariah at every family gathering or work event. You can let them stay, and then run the risk of defaulting on your own mortgage because of the lack of payments. You have to do something, and it is not pretty. You remind them of the “business is business” agreement, and they remember, but thought you would not kick them out in their time of need.
So you are in a pickle. You ask them to leave, and they agree, but need another month because the friends they are going to live with won’t be ready until “after the holidays”, “until school gets out”, “when the son goes off to college”, “when they move into their new place”, etc. The person is becoming a fixture, they are not leaving, you need to evict.
So, you go through the process, and spend six months in total without any revenue, due to no payments or being vacant. They are finally out, you throw away their old furniture and belongings left behind, you give away the dogs to the animal shelter, and you proceed to re-rent. Some family members understand, some think you are the rich landlord with no heart. You vow never to rent to family and friends again.
Instead, you should have followed a regular process like any other tenant. You originally said “business is business”, yet you discarded your tenant screening criteria. If any other renter had applied that was in a similar boat, you would have correctly assumed that they were high risk and passed. You would have done what it took to get a great tenant, and you would have gone on living the dream that you had, prior to the family member asking for a place to live.
Or if you would have done it right, the family member would have passed your pre-existing tenant screening qualifications. They would have had a solid credit score, and a decent income. They would have had a clean criminal background. They would have decent landlord references, and passed not only your renter checks, but most any other rental company’s qualifications, anywhere. You would have rented to them, and all would be well. You might have developed a closer relationship with a distant relative or a better friendship with an already good friend. It may have been a bit tougher to raise the rent, but it could still have been done.
Remember, always screen tenants, even for family members. If you decide to let them in regardless, at least you know the risk upfront. Getting into a risky situation, without understanding the risk up front, is never good. It’s not good for bungee jumping, it’s not good for parasailing, and it’s certainly is not good for renting.
Have you ever rented to a family member or friend? Had a child move back home that you wish you did not? Have you ever evicted a friend or family member?
Great post! I’ve always believed that one should never mix business with family/friends, so when my nephew asked about renting my SFH, I told him I’d found new tenants already. Simply saying no to him and his family may have made him feel alienated and I wanted to avoid that.
Thank you for the comment!
By nature, we all want to help others, especially if it can help ourselves too. But all too often, we get taken advantage of. As a landlord, that being taken advantage of costs time and money. Lots of money. Often, it is several thousand dollars.
Don’t like the view about the pets though. There enough animal who get euthanized for lack of homes. And many homeless pets on the streets because they are not wanted at the new place. ??
Thank you for reading!
Pets do get the brunt of a new residence. Having too many pets, or not allowing pets, is not the landlords fault. I have seen renters with 200 lb dogs. And they had another medium size dog. Or renters with 4 cats. Or a bunch of rabbits.
If you rent, get apartment sized pets.
I agree with Carrie. The sentence about sending the pets to an animal shelter stood out. Obviously the tenants were irresponsible and inconsiderate and the pets are the victims. Dogs and cats have feelings. I know dogs understand they have been rescued and are very loyal.
Thank you for reading!
The problem as a landlord is getting the pets left behind. They are definitely victims, but a landlord cannot keep every pet left behind. I had a tenant leave thee large large goldfish in a 5-gallon pail. I had to keep them for 28 days, and they died in that same bucket after about two weeks.
I agree that it’s not the landlord’s fault that there are such irresponsible, uncaring people that would leave their pets behind, but you could at least contact a couple of pet rescue orgs (or Craigslist) before, or directly after you cart the “victims” off to the shelter. As for the fish, there’s always Google or plenty of other sites that can tell you how to keep them alive.
Thank you for reading!
I am not going to spend any additional time feeding fish, on top of the expenses I already incurred. Or spend any additional time finding a good home to a animal left behind. The shelters will be able to deal with it most effectively.
Well, I’m definitely going to unsubscribe from your posts. I have no respect for anyone who would just let fish die in a bucket. I don’t care how busy you are or who left them there. That’s just cruel!
Thank you for reading!
It was the advice I received from my legal people and also the cops. To do anything else would have opened me up to a possible replacement of fish that may have died in my own care. By law, I needed to keep the 28 days so the tenant could re-claim them. If they would have made it, I would have donated them somewhere.
We took our son in he had no place to live, but recently he’s not wanting to pay his share of the bills as we agreed, but yet he can go buy all these other items but not pay his bills.
We like to draw up an aggrement but not sure what kind can you offer any simple suggestions?
Thank you for reading!
I would let him know it is not working out. Then, give him until the next payday to pay up, or leave.
I never experienced renting a house. We do have our own house and aside with my 5 family members, I have one nephew as a house boy in our home. But I evicted him because he stole anything from us. Even my sister has caught him, he still didn’t admitted the truth. So bad of him, we let him live with us, we feed him, we spent his studies, and etc.
It seems, when ever you give someone a chance, who is down on their luck, you get burned. Instead of being appreciative, they want to steal from you.
Very nice article.
My wife and I thought about renting out a property to my son who is attending the university not far from the property. We’d have to give him a reduced rate for him to afford it. Right now he lives at home. We’ll probably continue to let him live at home,so we don’t lose the rental income.
Thank you for the comment!
Good plan. Keep the revenue. Sometimes, you might have to pay no matter what, it’s better to keep a close eye on things. It will help him study too, with a bit of close supervision…
My fiance and I used to rent from my mom, and because she is family, we went out of our way to ensure that nothing would ever be awkward. We were extraordinary tenants, I hope.
Thank you for the comment!
I am sure you were! Of course, if you added Vodka to everything, maybe not..lol. Family can be great, as long as they have a great background. No different than anyone else.
I am very very hesitant to get involved in any business type transactions with family or friends because it always seems to end up a mess. I think you have to really be willing to stand up for yourself, and be willing to take whatever fallout comes with it when the relationship goes sour. You’d think that family and friends would be the last people to take advantage, but it seems the opposite is often true. Many years ago I accepted a loan from my dad when I needed a car to get to work, and he tried to extract an extra payment from me after I had paid the balance. Good thing I kept records.
Thank you for the comment!
Yes, it can strain a relationship quite a bit. Especially if you have just evicted your own Mom… And often, older relatives seem like they should get the better half of the deal.
We rent our basement studio to “acquaintances.” I wouldn’t be opposed to having a family member rent, or even a very close friend, but there are no exceptions: you sign the lease! It’s better to avoid having people that are too close to you rent. It has the potential to ruin the relationship. If you want to rent to someone you know I’d say make it an acquaintance.
Very true. But even more important is tenant quality. Knowing you have a lease is good, but knowing you do not have to enforce it, is even better. Good tenants just know how to act, and when to pay.
I think Maggie H. said it best in the first comment. Simply tell them you have found new tenants. Avoid the awkwardness of saying no. It isn’t the most honest, but they aren’t going to argue with you. Better to have one month of vacancy than 6 months trying to evict, and all the time lost after eviction, fixing broken things…
Yes, family members can be difficult, especially if there is a issue with non-payment or damages. If you know more history about the family member that a background check would show, that might be another reason to say no. It’s always better to error on the side of having friendly thanksgiving dinner discussions.
Hey. My relatives stay in my property after they fell on hard times. There is no official agreement and they pay me what they can but nowhere near what I would get by renting it. Anyone have any idea where I stand on tax for this? Cheers
You need to talk with an accountant. There are some provisions when you rent below market, the IRS might allocate some extra income to you. Maybe you can give them the rent as a ‘gift’, and report it on the gift tax forms.
Thanks for the advice!
You are welcome!
My situation is the opposite. My aunt invited me and my family to rent from her and she said I don’t have to pay much. All I needed is to fix it and I did. After we have spent a lot on it and it greatly improved, she then suddenly raised the rent and now I felt that I have taken advantage of since the house was broken and we made it livable. I moved even if it’s farther because I thought I’m going to save half of my rent but now I’m gonna pay the same plus time I’ve wasted!
What to do?thank u
Thank you for the comment. Yes, it can go both ways. Think of it as a small job, where you got paid in reduced rent. Now you have to pay market price.
Were in a pickle. My husband rented one of our houses to his brother for $1200 less than our mortgage payment and about $1500 below market value because he had lost his house and filed for bankruptcy. Brother has a wife that doesn’t work and two kids and at the time my husband and I were just dating and making $80k more a year because I was working, and we didn’t have a baby.
Now his brother is making more money than my husband and back on his feet but it’s still costing us $700 a month to rent to them. It was a HUGE struggle to raise the rent $500. We are currently over budget every month and no longer saving money to cover these costs. Any suggestions on how to approach them with raising the rent with out them hating us? We’ve tried to bring it up and they snap back with “well that’s the deal we originally made when we moved in.” They’re now saving money, buying lots of toys and vacationing so they’re not broke.
Any help is appreciated!
Give your brother-in law the numbers and tell him that you have to increase his rent or he he has to leave. There is no reason why you should be subsidizing the roof over his head if his finances have gotten better.
I 100% agree.
Did my last comment go through?
Got it!
4 years ago my husband (before we got married) rented his house to his brother who had just lost his house and filed for bankruptcy. Since he was single and had the money to do so he rented his house out for $1200 less than the mortgage payment. Since then we’ve had a baby, bought another house and I’ve quit my job to stay home with the little one ( which means bringing home $80k less a year. His brother is in a much better situation now (making more money than my husband, and his wife is able to stay home. good for him! 🙂 and were now bringing in a lot less. We’ve increased the rent a a few hundred dollars but with much difficulty, and guilt trips. But we’re still over budget because of the extra money it costs us to rent to them.
We need to increase their rent just to cover the mortgage (which is still below average rental costs in the area.) any pointers in discussing this with them without having them be mad at us. They have aggressive type personalities and my husband and I are passive people pleasers. When we try to bring it up they tell us ” that wasn’t out original deal.” But they were financially hurting and we had a lot more disposable income and it was meant to be a temporary solution.
No lease at this point. Month to month
Any advice is very appreciated!
Thank you for the comment!
You can tell them what it costs you to run the place. Tell them you cannot afford to subsidize their home, and need a higher rent, or a new renter. Lay out the facts, and ask “what would they do if they were in your shoes”.
Should we of protected in a tds a friends deposit in an agreement between friends ?
Thank you for the comment!
Always do everything the same as for a non-friend. Same screening, same deposit, same lease agreement.
sadly we didnt know …. we are being taken to court even thou they have had good references to move on a full deposit back …. compensation for what ! they havent suffered at all
Good luck!
This is the most selfish and ridiculous thing I’ve ever read. Whatever happened to being a good person. Yes every situation is unique and has the risk of turning out bad but people shouldn’t turn away family. It’s too much of a hassle to evict them so I’m not even gonna try to help them. The economy can be hard on all types of people, it’s a shame it seems to be hardest on decent people instead of the greedy selfish hypocrites in the world.
Thank you for the comment!
There are far too many horror stories about renting to family members. It needs to be treated like a business.
If you want to help someone, fine. But do not call it renting to a family member, call it what it is, a donation.
If I can help my family out I will at all times! I will expect the same from them. If you cannot afford to rent to a family member then don’t! But don’t sit here and whine about it later! Family should help family ! Where are your morals and values.
Thank you for the comment!
You are correct. Rent (or give) to family if you want. But if you are running a business, run it that way. If you are donating the unit, keep in mind you might have to pay tax on any ‘gift’ that you give your relatives, if it is not rented at ‘fair market value’.
What happens when the family doesn’t pay you, and then goes off and buys new cars and goes on vacation in the Caribbean? And you delay your retirement, as you have a mortgage to pay.
Would you ever evict family? You are far better off moving them into your own home, or renting a different place for them, than foregoing your rental income. It’s easy to just stop paying at the other place if you see the relatives abusing your generosity.
Renting to a family member can be a problem even if you treat it like a business and have a rental agreement. And not always from the tenant.
My wife and I recently rented to a family member who was very good with paying on time. A great tenant. Then she got sick suddenly and had to go into a health care facility. She wanted to pay 2 months in advance, which is what the contract stated.
The family member was on my wife’s side of the family and she took offense that we collected rent when she was no longer living there. But we couldn’t rent out the house with all her furnishings and it actually took about 2 months for the family members to clean out the house. We couldn’t put it up for rent again until all the belongings were out of the home.
This has caused a “problem” between my wife and I, not because of the tenant being “Bad” but just because the tenant was a family member.
Thank you for the comment!
You are correct. There are a lot more politics in a family situation. Imagine if you would have evicted her…
I purchased my Great Grandma’s house August 2014. I’m single with no kids and my dad was having some problems so I let him move in with me. (It’s a 3 bedroom house). After he drug his feet and whined he finally signed a contract I wrote up. I’m a recovering alcoholic and very active in my recovery. Well dad was working on building a sober life for himself, about 6 months sober by then, so I thought it would be a good environment for him to be in…
2 weeks after we moved in to my house he was drinking again. It has been a roller coaster. I have had to learn how to set boundaries and actually keep them, I learned exactly how my family felt and went through when I was drinking, I learned what I was OK with and what I was not. I also learned how to be assertive which is not something I enjoy at all, but it is definitely needed.
Well it is the end of January 2015 and he is now finally moving out. But of course he has not packed a single thing so I know that will all be on my shoulders. He is supposed to be going to treatment next week so I am praying that he does and that he gets the help he desperately needs.
I think God put dad to live with me for a reason… to finally get the help he desperately needs. Plus to continue to teach and mold me into the person He wants me to be.
I think everything in life has a lesson. Some can be avoided but for those of us who ignore that gut feeling of “this probably isn’t a good idea” hopefully we’re open enough to learn that lesson so we don’t have to do it again!
Thank you for the comment!
That is an interesting experience for sure. When it is a relative it makes it infinitely more difficult.
Thank you for this excellent discussion. My mother has gone into assisted living. She wants to rent her 3-bedroom farm house, furnished, to her nephew’s grandson. The young man, now 26, grew up across the road from mom and was very close to my parents. This all occurred after I went to college so I do not have a relationship with the young man.
I have read all the posts above and agree with “same screening, same deposit, same lease agreement” BECAUSE if something happens to me and my “out-of-state” kids have to deal with this I want everything clear and legal.
My question is, do you or any of your readers have experience or advice about “renting” versus “caretaking”. There are many farm buildings we would have him look after (no livestock) as well as protecting the property with his presence there. He would still pay rent, have furniture and FREE GAS because there is a well on the farm.
Thank you for the comment!
If you want him to use and maintain the buildings, that is a different contract than just renting. If he is just watching them, and not using them, you may want to stipulate that he does an inspection periodically and notify you. When he does that, maybe he can get a small payment.
I say it is ok to rent a family member who is responsible and can pay the rent.
We can rent to a stranger and get burned sometimes, I might as well take a chance to rent a fam member whom I think is a good person. Family first, money second
Thank you for reading!
The devil you know is always better that the devil you do not know. Keeping money within the family is another great way to preserve wealth. However, never believe that a leopard will change its spots. If a family member fails your criteria, move on to the next candidate. Unless you do not mind subsidizing them. If you ever have to evict, the family repercussions will always be worse.
I and my husband rented out our house to my brother in law ,his wife and kid and 2 step kids as they couldn’t find a property which they could afford and had all that they wanted in a house. This was agreed on in the belief that his wife would work part time and contribute towards their down payment. She never went to work but they always wanted things that they were looking towards us for help with.
We had enough of it for one year and asked them to vacate the property.They spread rumors with the neighbors and family that we were heartless and only used them so that we could have renters in our rental property. When clearing the house out they took every piece of furniture that we had left behind for their use. e have had a falling out and have decided that we had enough of renters including family.
Thank you for reading!
That is another great story about the pitfalls of renting to friends and family. After an experience like that, there is no way to dig out. The renters have a bad taste and you do as well.
I have unintentionally rented to a friend and it has deteriorated. She was supposed to buy into the house but hers didn’t sell so she has been paying 1/2 the mortgage monthly and lately, half the utilities. But ther has been alot of discord. She has moved family in and out three times, causing considerable disruption. I have said I think I should sell. She is demanding a Notice of Termination and says she will take it to the Landlord Tenant Board. What are my rights?
Thank you for reading!
She is a tenant of yours, not a friend. You can raise the rent, unless you have a lease preventing it. You can give notice to move out. You can evict. Never fear, it is easy to get tenants out. I would advise using a cheap eviction attorney and not worry about any hard feelings. That puts a buffer between you and your former friend.
I have a home in Manchester my sister has lived there rent free for 12 years 6 of them I have not been there. We as sisters never had any legal agreemant and now after living in London for 6 years I am homeless and on ESA, and so do not have the money to get her out as she has refused to go. Her lawyer has sent me letters saying if I go there the police will be called. In dire straits any advice?
Thankyou for reading!
I would consult an attorney. It’s your house. Sell it if you have to.
I just came across the excellent post and totally agree with it. My husband and I are on the other side of the coin and it’s the “landlord” who is skirting responsibility.
My mother in law bought a house as an “investment” almost 10 years ago with the understanding he would pay the mortgage/utilities/etc. He lived there for about 5 years and having friends live there helping out with costs. Well, I have been living there with just him for 4.5 years now and have done a lot of work to the landscaping and aesthetics of the house. The only time we weren’t able to pay on time was when the office I worked at closed and unemployment hadn’t kicked in. Other than that, we have been genuinely stellar and pay everything early or on-time.
There has never been a rental agreement and last time I asked for one a few years ago, his mom got really offended and let her emotions dominate before acting like it didn’t happen. Aside from this topic, we have a really great relationship with her, but she really just doesn’t have a mind for finances or business, I’ve discovered.
In addition to basic liabilities and rights, I feel having a real agreement is imperative to keeping things legitimate and also to enable my husband and I to have a valid rental history as well… since we definitely do not plan on living here forever.
I feel like we have essentially been paying off her mortgage and fixing up her house (she lives in another state), but have nothing (like credit/rental history) to show for it. I have had minimal luck finding resources online that address this aspect.
Any suggestions? Thank you!
Thank you for reading!
A rental agreement protects the tenant more than the landlord, so I can see why you want it.
You and/or your husband have been living there for about 5 years, and things are working. I would have a tendency to leave things alone. From what I can see, you may be paying under market based rent, and have moved in extra tenants to help out. Both of these would be against what I would recommend.
You should be maintaining the property in regards to landscaping and aesthetics. Often that is in a rental agreement. I hope your definition of improving is also the markets definition. Often, a renters improvement needs to be torn out in order to make things better.
You are correct, you have been paying off her mortgage. All renters do that. Your rental history is with your mother in law. She will give you a good recommendation, or not. Very few landlords report any rent payments to any credit bureau. Although some of the very large ones (10,000+ units) do.
I would just let sleeping dogs lie at this point.
I think this is a rather judgemental post. I rented a house from my parents for 11 years and never once was late with my rent. It wasn’t a case of falling on hard times, I just wasn’t in a position to buy. Letting a house to a family member can be a positive thing. not only did I feel an obligation to look after the house, I invested my own time and money into the property. It was my home and also my parents investment. On a similar note, my parents also bought a house for my sister while she was at university. My sister acted as the landlord, organising the other tenants and arranging repairs. My parents never once regretted that decision.
Thank you for reading!
Renting to family can be good, or bad. You just need to follow the rules of tenant screening, like for everyone else. Odds are, you would have passed no problem. A solid renter that is family can be real good, if they pass the screening.
I am going through the typical landlord troubles of renting to family members that was discussed in the post. My in-laws (wife’s side) lived with the wife’s parents for close to 2 years before deciding to move out. They came to my wife and I wanting to buy our newly remodeled home. That’s when the trouble started. We were excited, thinking it was a great time for us to sell because of recent losses in my family. So we started the agreement process.
I was blind and deaf to all the signs trying to steer me away from the process because it just seemed too good to be true with the predicament my wife and I were in. She had to be put on bed rest so her income was gone and we were/are in some bad credit card debt from the remodeling process. We had a new car and things weren’t looking good.
My brother in-law (aka Travis) had a solid history of quitting a getting a new job about every 1-2 months for the past 2 years and his wife and a stable job as a teacher’s aid that didn’t pay too well. Then Travis had a “life changing” reality check when he went 4 weeks without a job because of his job history. This led him to a job just 2 miles from my house and his wife also work about 2 miles from there also. He desperately and promised that he wasn’t going to quit the new job (which he hasn’t yet) and he also said that the bank told him that all he needed to do was work for 4 months to get the house loan.
I played along with this trusting that he was a honest man. We agreed that they could move in with my wife and I for the time being and that they could pay rent until they could qualify for a loan. All they requested of me was to take my house off the market. So I did.
Things seemed great. I even told him that I would foot the bill for any upgrades he wants to the house as long as he helps me to the work.
They were paying their rent on time. which was easy because i allowed them to split it up into two payments a month. ($315.00 each). Travis was doing well at his job and my wife was baby sitting their child while on bed rest.
Then things starting to get weird. I got this unsettling feeling that they were backing out of our deal. (Which I informed them in the beginning that if they did we were no longer friends). The feeling drove me to ask my mother and father in laws if they have heard anything and that’s when it all unraveled. Travis lied about the bank telling him that it would only take 4 months and he also was trying to make a deal with another family member to buy their house.
So now i’m stuck with renters instead of buyers and they are continuously asking for handouts. Asking me to leave behind my furniture, asking to lower the rent, even asking me to give back half of their rent if we sell it to someone else! It’s amazing how they have no boundaries for hand outs.
The worst part about it is that I put in a $3000 french drain in my backyard for them and they said they would put half the cost into the home loan so now i’m down $3000 for no reason other than them wanting it in the back yard.
Just goes to show that family will take advantage of you at every corner.
If you are going to give set a hard limit on how much because takers have no limits.
Thank you for reading!
You have found out the reason the hard way, why you must treat family the same as non-family.
This is an older topic but I’m hoping I can get a response. I rent a room from my cousin with very limited access to the rest of the house. When I first moved in 10 months ago, he understood I couldn’t pay as much as he wanted ($600) so in lieu of that, I paid what I could($400-$450) and did chores around the house, mostly mowing his grass to make up the difference.
I got a better job after around 3 months of this and managed to start paying him what he asked for originally. However I lost that job after 2 months and had to go back to my old job that did not pay well at all, so I was only able to give him around $200-$300 a month for a few months, while still mowing his grass and an added task of staining his fence(which took me approximately 30 hours over 3 months to do, due to work schedule or inclement weather).
Since the new year started, I’ve had a job where I can afford to give him the $600 he wanted, plus extra towards backpay. He recently, after 5 months of this arrangement, more or less demanded I start giving him $800 a month or he’d force me to move out in 30 days(after giving him $600 for the month however), knowing I can’t accumulate the funds to move out in such a short notice.
He also said I still owe him $1500 in backpay, even after giving him $450 since I started my new job, meaning he never considered any of the chores I did or staining his fence in lieu of paying him. At my current pay, that barely leaves me enough money for groceries, my own phone bill and transportation money. Let alone to save up to move out.
Is there anything legal I can do to get him to stop basically extorting me?
Thank you for reading!
So just to make sure I understand the situation. Your cousin wanted $600 a month, and you agreed. Then you could only afford $400 to $500. I suspect it was closer to $400.
Then, you got a job for two months, and paid the $600. Then, you lost the job, and could only pay $200-$300. It’s funny how renters math works. You were paying $400 to $500, now it’s only $200 to $300, with your same old job.
You illustrate the exact reason for this post I wrote. He should have screened and declined you. Now he is out money, and you feel you are being shortchanged by having to move out because you are ‘not ready’.
Move out right away. Ask him to forgive the amount he says you owe, if you move out this weekend.
Some issues I noted…
You only stained the deck ~30 hours, but it took 3 months due to work schedule. It should have been a weekend or two. Are you working that much, yet cannot afford a mere $600 per month? If you are paying 30% of your income, that is only making $2,000 a month.
He raised his rent to $800, that is reasonable as it has been almost a year. You likely do not have a written lease. He can raise the rent anytime. He may have raised it to get you out. Please take the hint. You are like a kid living at home that gets a set of travel luggage for a graduation gift from their parent and cannot take the hint.
Hey! I’m trying to move to a small town where housing options are very limited. Basically the only option is to buy and I’m not quite ready for that, I know I can get a loan but due to not having a whole lot of credit history I’m going to have to put down more than I have for a down payment and have a higher interest. I’m hoping I can get a family member to buy the house I’m looking at so I could rent to own or rent for a year and then buy. Do you have any ideas of the best way to present this to my couple family members? I know I want to be responsible for repairs on the property and I will absolutely want a written contract. I already have a job in the new town and I start in just a couple months so I have to have a solid plan. I’m okay with risking getting screwed, I’m a good tenant with good history and decent but not much credit. What are other possible options? There is one apartment building with no upcoming vacancies and one massive house up for rent in a 50mi radius. But I want to spend my life in this area, in this town.
Thank you for reading!
You may be able to buy the house directly from the owner, on a contract for deed. I would not be opposed to doing a lease with the option to buy with the owner either. Or have a close family member or friend buy it with you. You make all the payments. Save money, so they are not out of pocket at all. You make the down payment, and any closing costs. Put the risk on yourself, not your benefactor.
When you are asking for other people to loan you money, it is a bit tough. If you are not ready to buy, how can you convince other people that you ever will be ready to buy, or they they should be ready to buy for you?
Thank you for your quick reply!
Looks like I have some other options to look into, I wasn’t aware that you could ask a seller about a lease with option to buy so I will probably start there.
I was hoping someone in my family would be happy to make a little profit off me, worst case they evict me and then sell the house. I haven’t had an eviction or even come close and have just shy of ten years rental history so I don’t feel like I’m too big of a risk to take on.
How’s retirement so far?
The problem with your worse case, is the person spends quite a bit of money to evict you, then pays a realtor a commission to re-sell. The total cost is likely more than 10% of the original purchase cost. If you put 20% down, it would help. Since you have been in the real world renting for 10+ years, you should have at least $20K (or $100K) to use. Saving a mere $2K a year, for 10 years, is $20K.
Retirement so far has been great!
Ah, if only life went the way we wanted it to 🙂
Thanks again!
Exactly… And that is why it may be tough to get someone else to finance a home for you. You are in the same boat as many others, and no one wants to lend them money either.
Old thread but still relevant. We rented to family members who would not have met the minimum requirement for renting had we treated them like everyone else. They have a long history of being evicted, moving out in the middle of the night, being late on bills, and general mismanagement of their funds. We thought by renting to them we were helping them get back on their feet etc. The house we rented to them wasn’t perfect and we expressed that but nevertheless despite them paying below market value they have demanded all sorts of fixing without upholding the most basic of what we asked them to do.
If we could do it all over we would have not rented to them due to their credit history and just watching how they have lived with various family members and having complaints with all of them. Very expensive lesson learned and we will never be renting to family or friends again.
Thank you for reading.
A good deed never goes unpunished. When a person has a bad credit score, and has had a bad score their entire life, they likely will not change. A leopard doesn’t change it’s spots.
I have another sad story about renting to family members. My elderly sister has a 5 bedrm house that she has never really been able to afford, especially after having to retire from teaching about a year ago because of health issues. She already had myself & our grand-nephew living in the house for a few years, and then abt 2yrs ago, she let our niece move in because she was having problems with her then-landlord. It took her a few months to start paying rent, and then it was sporadic, as was with our grand nephew. After many arguments, I drew up a rental agreement for the two of them, and payments have been regular, up until they found out that my sister has been behind in paying the mortgage and she was in danger of losing the house. Long(er) story short, I helped her with filing BK, and now I’ll issue a new rental agreement with more provisions, being that there are other family issues that keep us increasingly at odds with one another, to the point that it is now a hostile, very heavy atmosphere. My sister does not want to just evict them, as they have some medical issues, and indeed, this is why she got this size of a house in the first place, but I think everyone would be better off just because of the stress level. My question is: should it be a lease, as my sister is considering selling the house in about 6 months? My thought is that this would put their time limit in writing, and maybe some behavioral guidelines as well.
Thank you for reading.
You are 100% correct. Renting to family can be challenging even if your rent is being paid. There are many more dynamics in play when you rent to family.
It’s possible that soon my wife and I may moved in with my widower father. My problem is this my stepdaughter and her boyfriend hinted that if we moved they would like to rent our house but can only afford to pay about $88 less than our current mortgage ( our mortgage is escrowed insurance and taxes included) while I would not intended to make a profit from them I am having a problem convincing my wife this is a bad idea not to mention I’ve seen how they take care of their “home” ……. what to do without causing myself a problem
Thank you for reading!
Just run a credit check and see what some up. I suspect like you do, it will be a disaster.
I currently live in a place that’s owned by my mother. My mom, my brother and myself used to all live here together. My mom and brother both moved out to separate homes and I stayed as a renter although there’s no rental agreement. I’ve lived here renting for almost a year making many improvements to the home. I just today, received a text from my mom telling me that she is moving back in the home this weekend and my brother will be doing the same. We have all three had a rocky relationship this past year and I know that living together will create many problems. She is my mother/landlord and we do not have a rental agreement but does she have the right to tell me that she and my adult brother are moving back in after a year and with only two days notice?
Thanks and any advice is greatly appreciated!
Thank you for reading!
Your mother does not have the right to move back in with you, but she is not only your mother, but your landlord. She can give you notice and make you vacate, then move in. And you would be looking for a different place, or begging to move back in.
I’m not a supporter of renting to family members. However, if homeowner has no other choice, they need to screen relatives/friends carefully, as any other tenants. And thank you for mentioned that in your article. I also would like to warn landlords of conducting only verbal agreements with their relatives. It might tuns against them. So, they need to discuss everything with future renter and put it into a written contract. And if property owner decides to raise the rent, this article [MOD EDIT] advises how to do it carefully.
Thank you for reading!
Renting to family can be good, you just need to be careful.
My husbands brother and wife moved into our basement. It all felt so fast and I didn’t really have time to think through it. We went out of town when I was 8 months pregnant, and we left our key with our mother-in-law so she could care for our dog. We specifically said not to move in while we were away, and when we got home and went into our basement it was chuck full of their things.
My husbands brother (Jack) had decided to adopt a puppy before moving into our basement. When we discussed the possibility of them living with us he said he felt like it was meant to be because his current residence (in his wife’s parents basement) didn’t have a fenced in property, and they didn’t know how they would keep a dog there. When I found out about the dog I got this horrible feeling, but I felt pressured into being okay with it because he was almost tearfully telling us what a miracle it was. A new puppy seemed like such a bad idea with a newborn baby in the house. Also I didn’t want a puppy training in our basement.
There was also something else irking me. Our basement is worth upwards of $1000 a month, being close to two Universities. It is in a fantastic location, which is why we chose to increase our mortgage and purchase this house. They could not pay that amount and suggested that if we let them have xfinity in the basement they would pay $700. That is including all the extra utilities we would need to pay with two extra people living in the house.
At first them moving in was no big deal. The worst part was having no storage space for ourselves, and being forced to put all our things in our garage. Then they told us their stove didn’t work, and they needed us to replace it. So we paid $400 to replace the stove. Then the fence they were going in and out of everyday fell apart and they asked us to replace that which turned out to be $600. Then our washer and dyer broke and because we have people renting our basement and using our other ones we were forced to spend $1500 on a brand new washer and dryer.
The dog has also, not surprisingly, been the worst part of having them here. He is a German Shepherd bread that can’t control himself. The other day I let him in the house and he jumped on me and scratched the entire length of my back. He used to pee on everything, and our renters/family would take a towel and wipe it into our floor, thinking that was cleaning it up. There is also carpet in the basement and whenever I go down there I get smacked in the face with the scent of dog pee. I don’t trust their dog around my baby, because I have not only been scratched but also bitten by him. I just know we are going to have to tear up all the carpet in the basement when they move out costing us almost all they have paid us in rent.
They have done an excellent job paying rent every month. I just worry because my husbands brother decided he didn’t like his job and quit. He has now had 4 jobless months with no prospect of another one. I honestly don’t know if they will be able to pay us in the future.
My husband and his brother have had a strained relationship in the past, but now that he lives here it seems to be better. I’m worried that if anything goes wrong they will never speak to each other again.
Our renters are the definition of new aged millennials. When they don’t like something (job) they just up and quit. They spend money like there is no tomorrow on things that aren’t necessary, and they just hope they will be able to pay rent month by month. If I am being honest I want them to move out, and maybe learn some things about real life. I also want to rent my basement for it’s real value as babies are not cheap. I just don’t want to ruin the relationship we have with them. To end on a positive note. They are always willing to babysit our baby and that has been super nice. The moral of my story is don’t rent to family unless you know they will pay you the full value, and not take advantage of you. I would love some advice in this situation.
Thank you for reading!
No good deed goes unpunished. Great story that helps illustrate my point about the risks of renting to family and friends.
I bought an investment house in 2010 and I’ve made some classic mistakes. I let my wife’s parents move in then since they were losing their house in the recession. They pay on time and have taken pretty good care of the place aside from letting the lawn die. When we looked for the place, we found one that could more or less be sustainable on $1400 rent (the max they could ever pay on fixed income). Costs have been more in the $1400-$1500 range. For most of the past 7 years, we have been losing a little each month, compared to the rent. This is most noticeable when some expensive repair is needed and I have to cough up the money. However, the property value has skyrocketed since we bought at a good time.
The problem now is that the market rent for this place has grown to about $2200-$2500 and we are just collecting $1400. We frequently hear them complain and worry about their expenses here (SF East Bay). I foolishly thought that they’d live in the unit 5 yrs or so and then need to move to a single-story house since the stairs are difficult for them. They are priced out of the market now and have used phrases like “live here until I die in 10-15 years”. We were encouraged recently when they investigated low-income rentals but they’ve seemed to not be “poor” enough or have messed it up in other ways. Our hope has been that they’d figure out their own situation and eventually move out. We had told them that they could stay as long as they needed but I just didn’t think that meant FOREVER.
When I think about all of the uncollected rent relative to market rate, it really irritates me. Another 10-15 years of this would cost me over $100K and I don’t want to do that! Our dissatisfaction has boiled up and I think they know something’s up. I wish there was a good way out of this for us. We don’t want to ruin relationships or force aged parents to leave. We have yet to have “the talk” with them but that needs to happen soon. What I struggle with is balancing my wants as a landlord with helping my wife’s family. When market rent was closer to $1400 this was much less of an issue.
Thank you for reading!
Another great reason why you cannot have a different arrangement with family as on outside party. hopefully you can gradually raise the rent. Maybe get them an apartment that you help pay rent for a year?
My mom and aunt are currently in a bind, having become trustees of my grandmother’s estate (i.e., her house), upon her passing last year. For virtually his entire life, my uncle has lived with his mother (my grandmother). Despite being a highly intelligent person and a former engineer, he fell into drug addiction in the 70s and 80s. My grandmother never put him out on the street. He did get clean and sober and stayed so for a very long time. He became an HVAC expert and did well in his work for a while. But, as a result of drug treatment for hepatitis C, he developed extremely painful neuropathy in his legs and feet, and went on permanent disability. For the last 5 years of my grandmother’s life she was bedridden, and my uncle and his girlfriend lived in her very nice home and took care of her around the clock. (Truth be told, the girlfriend did more of the work, but my uncle did quite a bit too.)
My grandmother wanted to leave the house to my uncle outright. My mom and aunt convinced her to put the house in a trust and make the inheritance more fair. She agreed, but she stipulated that my uncle would be able to live in the house until his passing, as long as he pays the property taxes. (About $4500 a year.)
There are six heirs to the property– the six grandchildren, including myself.
Feeling concerned that my uncle and his girlfriend are irresponsible with money, I went online and lo and behold, after six months, and one or two tax payments, they are now already delinquent.
My mom and aunt need to put their foot down, but what can they do? They will not render their brother homeless. He has permanent disability and social security income, as does his girlfriend. So, they could afford the ~400/month tax payment if they were responsible with their income.
We are looking for a humane option. My mom does not have a lot of income. She is 70 and retired herself. It is looking like it’s going to fall to me and her to keep up the property tax payments. Setting aside how unfair this is, is there any humane way for my mom and aunt, the trustees, to put their foot down?
Thank you for reading!
You are learning quickly why renting to family can be extremely tricky. It can work out, but only if the tenants would be good anywhere else too.
Maybe you can use their share of the proceeds to pay rent in advance. That is, the rent they owe get paid when the property sells.
Oh, and also stipulated in the family trust is that if my uncle does not pay the property taxes for an entire year, then the house will be sold. AND HE GETS 50% of the proceeds!! So naturally, we do not want to trigger a sale of the property, and thereby
Have his share of the property taxes taken out of the proceeds.
Thank you
This article assumes that a family member is bound to cause problems, be untrustworthy etc. Perhaps you just have some dodgy relatives, that doesn’t mean we all do!
Thank you for reading!
The article does not assume that family members will cause issues, but it does speak to the fact that often family member swill want to rent from you for various reasons. The family member should be accepted or rejected based on your pre-determined criteria.
I’m in the opposite situation here….I am one of those “dodgy” family members whom following a divorce, moved my children and I in with my mother. We do not have an official agreement however I do pay rent. My circumstances however, are different in that my mother is not respectful of MY rights as a tenant. Prior to us moving in, I was unaware that she drinks on a nightly basis and is aggressive and violent when drinking. She enters my room without permission, refusing to leave because “it’s her house and she can do whatever she wants in it”. She has been physically violent towards me. She refuses to allow me to have any guests. She opens my mail. This just barely touches on the surface. I live in genuine fear for my safety but am currently without any other option. I work full time and am a single mother. I do not earn enough to supply adequate housing for my children and I.
My question is, as a paying tenant, are my rights protected under Landlord Tenant or is this type is arrangement exempt?
Thank you for reading!
It can definitely go both ways. A family member should also think twice about renting from a relative. At least you can move out when you want.
Ive been renting a Townhouse from my mother for almost a decade, shes given me a fantastic deal for the entire time ive lived there I pay the mortgage, she pays the taxes and insurance. She wants to sell because she has $50k in equity and needs the money for a buisness venture, she offered to sell it to me for full price, which would increase my monthly living expenses to more than i can afford, But I can get a Duplex rent the extra unit out to close friends and have to pay no more than I currently pay for monthly housing expenses. The last and most unwanted option is to go and rent another townhouse or apartment from someone else and pay their mortgage for them.. What to do??
Thank you for reading!
You will pay market for either of the two, but you may get a discount for no realtor fees on your mother’s place. Maybe you can give her the $50K and keep the existing mortgage, saving financing costs. You can always get a roommate.
You may find the duplex is very risky. Friends may be good, or bad. If you have never been a landlord, successful landlords, like myself, make it look easy. There are plenty of horror stories to go around.
Why not do both?
I am in this situation right now. I let my sister and her family move into my investment property when they couldn’t find anything affordable in our ballooning market. They have been in the house for 5 years. We fell into all those traps–they expected things that were not reasonable–despite a 13 page lease that covered anything and everything. I allowed things that I might not of otherwise allowed with other tenants. Now they want to move and are angry that I am making them follow the 30 day notice policy and full last month’s rent. She wants to go on and on about all the “upgrades” they did–which were not actually upgrades (general maintenance covered by the lease) and some without permission. It is a nightmare. I knew it has the potential to be-but I let my loyalty to family get in the way of business. Even though we had the “Business is Business” and Family is Family” talk–it never turns out that way when one feels slighted or has a sense of entitlement to your hard work. Just don’t do it!
Thank you for reading!
No good deed goes unpunished…
While the post is dated now, the advice is just as good AND SOUND today. Owner landlords work hard to own that property. Some hope for it to eventually provide income. Most want to keep it nice to increase in value and obtain good tenants. Rental property requires hard work, excellent business sense and lots of money to keep it going. It is not uncommon to have tenants who are irresponsible, do damage, don’t control kids, pets or themselves. No agreement to be your pet sitter, house keeper, provider of free junk storage or free rent for a story. I am guilty of renting to church friends and to pets. Big, big mistake!
Thank you for reading!