Whether you are a part-time landlord or a property manager for a larger company, there will always be the temptation to become friends with the tenants. For those who own and manage single family rentals, there may even be friends who have asked if they can rent from you. In the moment, it may seem like a good idea—a good friend would probably make a good tenant. However, this is not always the case.
So why shouldn’t you let your friends be your tenants?
More Money More Problems
A friend who becomes a tenant may pay rent late. Because of the established relationship you already have, this may not seem that bad. But then one late rent payment becomes two, which becomes a regular thing. You don’t want to be a burden on your friend, which puts a strain on you as a landlord. The same issue can incur with a tenant who has slowly become a friend.
Adding money into a relationship can be difficult. And when situations occur that will force your friend to pay more or if you need to dip into their security deposit due to property damage, it can make things awkward. You might begin to feel guilty from taking money from a friend which can lead to accepting late rent checks, or worse—rain checks.
Friends Get Benefits
We will almost always favor our friends over strangers, however, this can quickly become a dangerous legal standing. If you own multiple single family properties or a multifamily property, you will want to make sure you treat all tenants the same way. The landlord/tenant relationship is something that should be kept strictly professional. This because it is more difficult to maintain a leadership role over a friend who is a tenant when things get hard.
When it comes to things like rent increases and repairs, you might respond differently to a friend than to an unfamiliar tenant. You may choose not to make your friend pay more rent even if the market is moving up. When it comes to maintenance requests, you might rush to their concerns because they’re your friend. Or you might not take their concerns as seriously; each of which has its own problems.
One of the biggest reasons to not be friends with tenants is because of the resentment that might build up on their part. As stated earlier, adding money into any relationship can cause strain, but that strain can build up on either side. While you may feel guilty for taking their money, they may build up resentment when you’re making a profit off of them.
If resentment begins to build on their side, it can lead to late rent payments and general bad tenant behavior. While this isn’t as typical in tenants who become friends, it is always something to be careful of. Spare both yourself and your friend (or tenant) the drama and avoid renting to them.